Shareholders will be ecstatic, with their stake up 39% over the past week following Synthomer plc's (LON:SYNT) latest half-year results. Revenues were UK£988m, with Synthomer reporting some 5.0% below analyst expectations. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from Synthomer's four analysts is for revenues of UK£1.84b in 2026. This would reflect a satisfactory 2.5% increase on its revenue over the past 12 months. Losses are expected to hold steady at around UK£0.78. Yet prior to the latest earnings, the analysts had been forecasting revenues of UK£1.95b and losses of UK£0.13 per share in 2026. So it's pretty clear the analysts have mixed opinions on Synthomer after this update; revenues were downgraded and per-share losses expected to increase.
Check out our latest analysis for Synthomer
There was no major change to the consensus price target of UK£1.28, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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 Synthomer, with the most bullish analyst valuing it at UK£2.00 and the most bearish at UK£1.00 per share. 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.
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. For example, we noticed that Synthomer's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 5.0% growth to the end of 2026 on an annualised basis. That is well above its historical decline of 5.2% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to decline 11% per year. So although Synthomer is expected to return to growth, it's also expected to grow revenues during a time when the wider industry is estimated to see revenue decline.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Synthomer. Unfortunately, they also downgraded their revenue estimates, and our data indicates that is expected to perform better than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at UK£1.28, with the latest estimates not enough to have an impact on their price targets.
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 forecasts for Synthomer going out to 2028, 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 2 warning signs with Synthomer (at least 1 which doesn't sit too well with us) , and understanding these should be part of your investment process.
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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.