Analysts Are Updating Their Burford Capital Limited (LON:BUR) Estimates After Its Annual Results
It's been a good week for Burford Capital Limited (LON:BUR) shareholders, because the company has just released its latest yearly results, and the shares gained 3.2% to UK£11.44. Revenue greatly exceeded expectations at US$1.1b, some 29% ahead of analyst forecasts. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Burford Capital after the latest results.
See our latest analysis for Burford Capital
Taking into account the latest results, the three analysts covering Burford Capital provided consensus estimates of US$645.4m revenue in 2024, which would reflect a stressful 41% decline over the past 12 months. Statutory earnings per share are expected to dive 70% to US$0.98 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$672.6m and earnings per share (EPS) of US$1.10 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.
The analysts made no major changes to their price target of UK£16.44, suggesting the downgrades are not expected to have a long-term impact on Burford Capital'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. The most optimistic Burford Capital analyst has a price target of UK£18.29 per share, while the most pessimistic values it at UK£15.02. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
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. Over the past five years, revenues have declined around 7.2% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 41% decline in revenue until the end of 2024. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 30% per year. So while a broad number of companies are forecast to grow, unfortunately Burford Capital is expected to see its revenue affected worse than other companies in the 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target held steady at UK£16.44, with the latest estimates not enough to have an impact on their price targets.
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 Burford Capital going out to 2026, 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 Burford Capital (of which 1 is significant!) 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.
