Analysts Have Been Trimming Their Transat A.T. Inc. (TSE:TRZ) Price Target After Its Latest Report
It's shaping up to be a tough period for Transat A.T. Inc. (TSE:TRZ), which a week ago released some disappointing first-quarter results that could have a notable impact on how the market views the stock. Revenues missed expectations somewhat, coming in at CA$785m, but statutory earnings fell catastrophically short, with a loss of CA$1.58 some 114% larger than what the analysts had predicted. 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.
View our latest analysis for Transat A.T
After the latest results, the five analysts covering Transat A.T are now predicting revenues of CA$3.38b in 2024. If met, this would reflect an okay 6.7% improvement in revenue compared to the last 12 months. The statutory loss per share is expected to greatly reduce in the near future, narrowing 54% to CA$1.10. Before this earnings report, the analysts had been forecasting revenues of CA$3.55b and earnings per share (EPS) of CA$0.60 in 2024. There looks to have been a significant drop in sentiment regarding Transat A.T's prospects after these latest results, with a small dip in revenues and the analysts now forecasting a loss instead of a profit.
The average price target fell 15% to CA$3.58, implicitly signalling that lower earnings per share are a leading indicator for Transat A.T's 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. There are some variant perceptions on Transat A.T, with the most bullish analyst valuing it at CA$5.50 and the most bearish at CA$2.50 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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. One thing stands out from these estimates, which is that Transat A.T is forecast to grow faster in the future than it has in the past, with revenues expected to display 9.0% annualised growth until the end of 2024. If achieved, this would be a much better result than the 4.0% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 6.9% per year. So it looks like Transat A.T is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest low-light for us was that the forecasts for Transat A.T dropped from profits to a loss next year. They also downgraded Transat A.T's revenue estimates, but industry data suggests that it is 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 Transat A.T's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Transat A.T going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - Transat A.T has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.
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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.
