Magellan Financial Group Limited (ASX:MFG) just released its annual report and things are looking bullish. Magellan Financial Group delivered a significant beat to revenue and earnings per share (EPS) expectations, hitting AU$379m-20% above indicated-andAU$1.32-31% above forecasts- respectively 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Magellan Financial Group
Taking into account the latest results, the eleven analysts covering Magellan Financial Group provided consensus estimates of AU$275.7m revenue in 2025, which would reflect a sizeable 27% decline over the past 12 months. Statutory earnings per share are forecast to tumble 41% to AU$0.78 in the same period. Before this earnings report, the analysts had been forecasting revenues of AU$272.8m and earnings per share (EPS) of AU$0.74 in 2025. So the consensus seems to have become somewhat more optimistic on Magellan Financial Group’s earnings potential following these results.
The consensus price target rose 6.8% to AU$9.73, suggesting that higher earnings estimates flow through to the stock’s valuation as well. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Magellan Financial Group, with the most bullish analyst valuing it at AU$11.44 and the most bearish at AU$8.26 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Magellan Financial Group shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Magellan Financial Group’s past performance and to peers in the same industry. Over the past five years, revenues have declined around 13% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 27% decline in revenue until the end of 2025. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.8% per year. So while a broad number of companies are forecast to grow, unfortunately Magellan Financial Group is expected to see its revenue affected worse than other companies in the industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Magellan Financial Group’s earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it’s tracking in line with expectations. Although our data does suggest that Magellan Financial Group’s revenue is expected to perform worse 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 Magellan Financial Group. Long-term earnings power is much more important than next year’s profits. We have forecasts for Magellan Financial Group going out to 2027, and you can see them free on our platform here.
It is also worth noting that we have found 4 warning signs for Magellan Financial Group (2 make us uncomfortable!) that you need to take into consideration.
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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.
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