Dr. Lal PathLabs Limited Just Missed Earnings - But Analysts Have Updated Their Models
Investors in Dr. Lal PathLabs Limited (NSE:LALPATHLAB) had a good week, as its shares rose 7.9% to close at ₹1,827 following the release of its quarterly results. It was not a great result overall. Although revenues beat expectations, hitting ₹8.0b, statutory earnings missed analyst forecasts by 11%, coming in at just ₹10.13 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from Dr. Lal PathLabs' 26 analysts is for revenues of ₹32.0b in 2027. This would reflect a decent 11% increase on its revenue over the past 12 months. Per-share earnings are expected to ascend 14% to ₹37.12. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹31.4b and earnings per share (EPS) of ₹35.23 in 2027. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
See our latest analysis for Dr. Lal PathLabs
With these upgrades, we're not surprised to see that the analysts have lifted their price target 12% to ₹1,920per share. 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. The most optimistic Dr. Lal PathLabs analyst has a price target of ₹2,195 per share, while the most pessimistic values it at ₹1,180. 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 clear from the latest estimates that Dr. Lal PathLabs' rate of growth is expected to accelerate meaningfully, with the forecast 15% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 7.8% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 20% annually. So it's clear that despite the acceleration in growth, Dr. Lal PathLabs is expected to grow meaningfully slower than the industry average.
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 Dr. Lal PathLabs following these results. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Dr. Lal PathLabs. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Dr. Lal PathLabs analysts - going out to 2029, and you can see them free on our platform here.
Before you take the next step you should know about the 1 warning sign for Dr. Lal PathLabs that we have uncovered.
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