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Results: BASF SE Exceeded Expectations And The Consensus Has Updated Its Estimates

Shareholders might have noticed that BASF SE (ETR:BAS) filed its first-quarter result this time last week. The early response was not positive, with shares down 5.6% to €46.85 in the past week. Results look mixed - while revenue fell marginally short of analyst estimates at €20b, statutory earnings beat expectations 7.2%, with BASF reporting profits of €1.75 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for BASF

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Taking into account the latest results, the 21 analysts covering BASF provided consensus estimates of €82.2b revenue in 2023, which would reflect a perceptible 2.4% decline on its sales over the past 12 months. Earnings are expected to improve, with BASF forecast to report a statutory profit of €3.95 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of €83.6b and earnings per share (EPS) of €4.09 in 2023. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

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It might be a surprise to learn that the consensus price target was broadly unchanged at €53.82, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic BASF analyst has a price target of €72.00 per share, while the most pessimistic values it at €31.03. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 3.1% by the end of 2023. This indicates a significant reduction from annual growth of 9.1% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 2.6% per year. It's pretty clear that BASF's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for BASF. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple BASF analysts - going out to 2025, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for BASF (of which 1 makes us a bit uncomfortable!) you should know about.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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