Earnings Update: Here's Why Analysts Just Lifted Their Danaos Corporation Price Target To US$9.00
Shareholders will be ecstatic, with their stake up 20% over the past week following Danaos Corporation's (NYSE:DAC) latest annual results. Overall the results were a little better than analysts were expecting, with revenues beating forecasts by 3.7%to hit US$447m. Following the result, 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 analysts have changed their mind on Danaos after the latest results.
See our latest analysis for Danaos
Following last week's earnings report, Danaos's sole analyst are forecasting 2020 revenues to be US$447.7m, approximately in line with the last 12 months. Before this earnings result, analysts had predicted US$435.0m revenue in 2020, although there was no accompanying EPS estimate. So there's been a pretty clear uptick in analyst sentiment after these results, given the small increase to next year's revenue forecasts.
The average analyst price target rose 5.9% to US$9.00, with analysts clearly having become more optimistic about Danaos's prospects following these results.
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. It's also worth noting that the years of declining sales look to have come to an end, with the forecast for flat revenues next year. Historically, Danaos's sales have shrunk approximately 5.8% annually over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 6.6% next year. So it's pretty clear that, although revenues are improving, Danaos is still expected to grow slower than the market.
The Bottom Line
Probably the biggest thing to take away from these latest forecasts is that brokers are definitely optimistic on the business, given the forecast for profitability next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
One Danaos broker/analyst has provided estimates out to 2021, which can be seen for free on our platform here.
You can also see whether Danaos is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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