Merit Medical Systems, Inc. (NASDAQ:MMSI) Just Reported And Analysts Have Been Lifting Their Price Targets
Merit Medical Systems, Inc. (NASDAQ:MMSI) shareholders are probably feeling a little disappointed, since its shares fell 7.6% to US$86.24 in the week after its latest third-quarter results. Merit Medical Systems reported US$416m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.70 beat expectations, being 3.9% higher than what the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Merit Medical Systems from twelve analysts is for revenues of US$1.74b in 2027. If met, it would imply a solid 8.1% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to shoot up 24% to US$3.31. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.74b and earnings per share (EPS) of US$3.23 in 2027. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
Check out our latest analysis for Merit Medical Systems
The consensus price target rose 5.1% to US$107, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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. The most optimistic Merit Medical Systems analyst has a price target of US$123 per share, while the most pessimistic values it at US$90.00. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Merit Medical Systems' revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 6.4% growth on an annualised basis. This is compared to a historical growth rate of 8.6% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.4% annually. Factoring in the forecast slowdown in growth, it looks like Merit Medical Systems is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Merit Medical Systems following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Merit Medical Systems. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Merit Medical Systems going out to 2028, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 1 warning sign for Merit Medical Systems you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.