It's been a good week for Organon & Co. (NYSE:OGN) shareholders, because the company has just released its latest quarterly results, and the shares gained 5.7% to US$19.61. It was a workmanlike result, with revenues of US$1.6b coming in 4.0% ahead of expectations, and statutory earnings per share of US$3.99, in line with analyst appraisals. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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, Organon's seven analysts currently expect revenues in 2024 to be US$6.39b, approximately in line with the last 12 months. Statutory earnings per share are expected to nosedive 25% to US$3.04 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$6.37b and earnings per share (EPS) of US$3.09 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of US$22.25, showing that the business is executing well and in line with expectations. 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. Currently, the most bullish analyst values Organon at US$28.00 per share, while the most bearish prices it at US$16.00. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. From these estimates it looks as though the analysts expect the years of declining revenue to come to an end, given the flat forecast out to 2024. That would be a definite improvement, given that the past three years have seen revenue shrink 0.5% annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 9.2% per year. Although Organon's revenues are expected to improve, it seems that it is still expected to grow slower 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 plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Organon. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Organon analysts - going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - Organon has 3 warning signs (and 1 which is significant) we think you should know about.
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