AU$4.68 - That's What Analysts Think Webjet Limited (ASX:WEB) Is Worth After These Results
Investors in Webjet Limited (ASX:WEB) had a good week, as its shares rose 6.0% to close at AU$5.12 following the release of its half-year results. Revenues were AU$23m, with Webjet reporting some 9.2% below analyst expectations. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
View our latest analysis for Webjet
Following the recent earnings report, the consensus from nine analysts covering Webjet is for revenues of AU$83.9m in 2021, implying a stressful 69% decline in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 56% to AU$0.36. Yet prior to the latest earnings, the analysts had been forecasting revenues of AU$83.4m and losses of AU$0.30 per share in 2021. While this year's revenue estimates held steady, there was also a very substantial increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
Although the analysts are now forecasting higher losses, the average price target rose 11% to AU$4.23, which could indicate that these losses are expected to be "one-off", or are not anticipated to have a longer-term impact on the business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Webjet at AU$5.85 per share, while the most bearish prices it at AU$2.70. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Webjet's past performance and to peers in the same industry. One more thing stood out to us about these estimates, and it's the idea that Webjet'sdecline is expected to accelerate, with revenues forecast to fall 69% next year, topping off a historical decline of 27% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 22% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Webjet to suffer worse than the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Webjet. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Webjet's revenues are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Webjet. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Webjet analysts - going out to 2025, and you can see them free on our platform here.
Even so, be aware that Webjet is showing 1 warning sign in our investment analysis , you should know about...
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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