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Mediclinic International plc Just Reported A Surprise Loss: Here's What Analysts Think Will Happen Next

Investors in Mediclinic International plc (LON:MDC) had a good week, as its shares rose 7.8% to close at UK£2.98 following the release of its yearly results. Revenues came in at UK£3.1b, in line with estimates, while Mediclinic International reported a statutory loss of UK£0.43 per share, well short of prior analyst forecasts for a profit. 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.

See our latest analysis for Mediclinic International

LSE:MDC Past and Future Earnings June 4th 2020
LSE:MDC Past and Future Earnings June 4th 2020

Following the recent earnings report, the consensus from nine analysts covering Mediclinic International is for revenues of UK£2.77b in 2021, implying an uneasy 10% decline in sales compared to the last 12 months. Mediclinic International is also expected to turn profitable, with statutory earnings of UK£0.23 per share. Before this earnings report, the analysts had been forecasting revenues of UK£3.07b and earnings per share (EPS) of UK£0.23 in 2021. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The average price target was steady at UK£3.90 even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Mediclinic International at UK£5.30 per share, while the most bearish prices it at UK£2.60. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Mediclinic International's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 10%, a significant reduction from annual growth of 8.9% 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 6.5% annually for the foreseeable future. It's pretty clear that Mediclinic International's revenues are expected to perform substantially worse than the wider 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Still, earnings are more important to the intrinsic value of the business. The consensus price target held steady at UK£3.90, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Mediclinic International. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Mediclinic International analysts - going out to 2024, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Mediclinic International , and understanding this should be part of your investment process.

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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. Thank you for reading.