It's been a sad week for Medpace Holdings, Inc. (NASDAQ:MEDP), who've watched their investment drop 13% to US$382 in the week since the company reported its second-quarter result. Medpace Holdings reported US$528m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$2.75 beat expectations, being 8.9% higher than what the analysts expected. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Following the latest results, Medpace Holdings' ten analysts are now forecasting revenues of US$2.14b in 2024. This would be a modest 5.6% improvement in revenue compared to the last 12 months. Per-share earnings are expected to accumulate 5.2% to US$11.56. In the lead-up to this report, the analysts had been modelling revenues of US$2.17b and earnings per share (EPS) of US$11.25 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target fell 6.3% to US$403, suggesting the increase in earnings forecasts was not enough to offset other the analysts concerns. 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. Currently, the most bullish analyst values Medpace Holdings at US$435 per share, while the most bearish prices it at US$296. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Medpace Holdings' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 12% growth on an annualised basis. This is compared to a historical growth rate of 20% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.5% per year. So it's pretty clear that, while Medpace Holdings' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Medpace Holdings' earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Medpace Holdings' future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Medpace Holdings analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Medpace Holdings you should be aware of.

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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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