Results: EDAP TMS S.A. Exceeded Expectations And The Consensus Has Updated Its Estimates

Simply Wall St
·3 min read

EDAP TMS S.A. (NASDAQ:EDAP) shareholders are probably feeling a little disappointed, since its shares fell 4.1% to US$6.26 in the week after its latest quarterly results. EDAP TMS beat expectations by 6.5% with revenues of €11m. It also surprised on the earnings front, with an unexpected statutory profit of €0.031 per share a nice improvement on the losses that the analysts forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for EDAP TMS

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Taking into account the latest results, the current consensus from EDAP TMS' four analysts is for revenues of €49.9m in 2021, which would reflect a decent 13% increase on its sales over the past 12 months. Statutory earnings per share are predicted to surge 598% to €0.09. Yet prior to the latest earnings, the analysts had been anticipated revenues of €48.9m and earnings per share (EPS) of €0.09 in 2021. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a small lift in to revenue forecasts.

Even though revenue forecasts increased, there was no change to the consensus price target of US$13.25, suggesting the analysts are focused on earnings as the driver of value creation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on EDAP TMS, with the most bullish analyst valuing it at US$15.00 and the most bearish at US$12.00 per share. This is a very narrow spread of estimates, implying either that EDAP TMS is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that EDAP TMS' rate of growth is expected to accelerate meaningfully, with the forecast 17% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 4.7% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.9% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that EDAP TMS is expected to grow much faster than its industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at €13.25, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for EDAP TMS going out to 2025, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for EDAP TMS you should know about.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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