Earnings Beat: Zealand Pharma A/S Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
A week ago, Zealand Pharma A/S (CPH:ZEAL) came out with a strong set of second-quarter numbers that could potentially lead to a re-rate of the stock. Statutory earnings performance was extremely strong, with revenue of kr.4.5b beating expectations by 86% and earnings per share (EPS) of kr.55.34, an impressive 198%ahead of expectations. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for Zealand Pharma from 16 analysts is for revenues of kr.4.88b in 2026. If met, it would imply a satisfactory 5.1% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to plummet 27% to kr.28.88 in the same period. Before this earnings report, the analysts had been forecasting revenues of kr.4.63b and earnings per share (EPS) of kr.22.23 in 2026. So it seems there's been a definite increase in optimism about Zealand Pharma's future following the latest results, with a massive increase in the earnings per share forecasts in particular.
See our latest analysis for Zealand Pharma
Despite these upgrades,the analysts have not made any major changes to their price target of kr.442, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Zealand Pharma analyst has a price target of kr.745 per share, while the most pessimistic values it at kr.300. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Zealand Pharma's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Zealand Pharma's revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 10% growth on an annualised basis. This is compared to a historical growth rate of 79% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 16% annually. Factoring in the forecast slowdown in growth, it seems obvious that Zealand Pharma is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Zealand Pharma's earnings potential next year. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. The consensus price target held steady at kr.442, 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 Zealand Pharma. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Zealand Pharma analysts - going out to 2028, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Zealand Pharma that we have uncovered.
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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.