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Analysts Just Made A Major Revision To Their Ashford Hospitality Trust, Inc. (NYSE:AHT) Revenue Forecasts

Simply Wall St
·3 min read

Market forces rained on the parade of Ashford Hospitality Trust, Inc. (NYSE:AHT) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the consensus from Ashford Hospitality Trust's five analysts is for revenues of US$861m in 2020, which would reflect a stressful 40% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing US$1.1b of revenue in 2020. The consensus view seems to have become more pessimistic on Ashford Hospitality Trust, noting the sizeable cut to revenue estimates in this update.

See our latest analysis for Ashford Hospitality Trust

NYSE:AHT Past and Future Earnings May 26th 2020
NYSE:AHT Past and Future Earnings May 26th 2020

The consensus price target fell 9.3% to US$1.37, with the analysts clearly less optimistic about Ashford Hospitality Trust's valuation following this update. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Ashford Hospitality Trust at US$2.00 per share, while the most bearish prices it at US$0.60. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast revenue decline of 40%, a significant reduction from annual growth of 4.8% 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 5.1% next year. It's pretty clear that Ashford Hospitality Trust's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Ashford Hospitality Trust this year. They also expect company revenue to perform worse than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Ashford Hospitality Trust after today.

Want to learn more? At least one of Ashford Hospitality Trust's five analysts has provided estimates out to 2022, which can be seen for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

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. Thank you for reading.