Zydus Lifesciences Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
As you might know, Zydus Lifesciences Limited (NSE:ZYDUSLIFE) just kicked off its latest quarterly results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 4.2% to hit ₹79b. Zydus Lifesciences reported statutory earnings per share (EPS) ₹9.28, which was a notable 18% above what the analysts had forecast. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following the latest results, Zydus Lifesciences' 26 analysts are now forecasting revenues of ₹320.5b in 2027. This would be a satisfactory 5.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to shrink 7.9% to ₹38.75 in the same period. Before this earnings report, the analysts had been forecasting revenues of ₹318.3b and earnings per share (EPS) of ₹41.50 in 2027. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
Check out our latest analysis for Zydus Lifesciences
It might be a surprise to learn that the consensus price target was broadly unchanged at ₹1,229, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Zydus Lifesciences, with the most bullish analyst valuing it at ₹1,457 and the most bearish at ₹800 per share. 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Zydus Lifesciences' revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 14% over the past five years. Compare this to the 183 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 12% per year. So it's pretty clear that, while Zydus Lifesciences' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Zydus Lifesciences. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 estimates - from multiple Zydus Lifesciences analysts - going out to 2029, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Zydus Lifesciences that you need to take into consideration.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.