NATCO Pharma Limited Recorded A 5.3% Miss On Revenue: Analysts Are Revisiting Their Models
NATCO Pharma Limited (NSE:NATCOPHARM) shareholders are probably feeling a little disappointed, since its shares fell 2.3% to ₹890 in the week after its latest first-quarter results. Results look mixed – while revenue fell marginally short of analyst estimates at ₹7.4b, statutory earnings were in line with expectations, at ₹79.20 per share. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the recent earnings report, the consensus from nine analysts covering NATCO Pharma is for revenues of ₹32.3b in 2027. This implies a discernible 7.2% decline in revenue compared to the last 12 months. Statutory earnings per share are expected to dive 34% to ₹42.29 in the same period. In the lead-up to this report, the analysts had been modelling revenues of ₹33.3b and earnings per share (EPS) of ₹41.80 in 2027. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.
See our latest analysis for NATCO Pharma
The consensus has reconfirmed its price target of ₹1,004, showing that the analysts don’t expect weaker revenue expectations next year to have a material impact on NATCO Pharma’s market value. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. The most optimistic NATCO Pharma analyst has a price target of ₹1,180 per share, while the most pessimistic values it at ₹712. As you can see, analysts are not all in agreement on the stock’s future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 9.5% annualised decline to the end of 2027. That is a notable change from historical growth of 18% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 12% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – NATCO Pharma is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Yet – earnings are more important to the intrinsic value of the business. The consensus price target held steady at ₹1,004, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for NATCO Pharma going out to 2029, and you can see them free on our platform here.
And what about risks? Every company has them, and we’ve spotted 2 warning signs for NATCO Pharma (of which 1 is a bit concerning!) you should know about.
Valuation is complex, but we’re here to simplify it.
Discover if NATCO Pharma might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
