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It's shaping up to be a tough period for International Game Technology PLC (NYSE:IGT), which a week ago released some disappointing annual results that could have a notable impact on how the market views the stock. It definitely looks like a negative result overall with revenues falling 11% short of analyst estimates at US$3.1b. Statutory losses were US$4.39 per share, 35% bigger than what the analysts expected. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on International Game Technology after the latest results.
Taking into account the latest results, the consensus forecast from International Game Technology's nine analysts is for revenues of US$3.96b in 2021, which would reflect a huge 27% improvement in sales compared to the last 12 months. International Game Technology is also expected to turn profitable, with statutory earnings of US$0.12 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.06b and earnings per share (EPS) of US$0.18 in 2021. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share numbers.
Despite the cuts to forecast earnings, there was no real change to the US$20.58 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. There are some variant perceptions on International Game Technology, with the most bullish analyst valuing it at US$28.00 and the most bearish at US$11.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that International Game Technology is forecast to grow faster in the future than it has in the past, with revenues expected to display 27% annualised growth until the end of 2021. If achieved, this would be a much better result than the 5.8% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 23% per year. So it looks like International Game Technology is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as 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.
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 International Game Technology going out to 2024, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for International Game Technology that you need to take into consideration.
This article by Simply Wall St is general in nature. 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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