Earnings Release: Here's Why Analysts Cut Their Entravision Communications Corporation Price Target To US$4.50
Entravision Communications Corporation (NYSE:EVC) came out with its full-year results last week, and we wanted to see how the business is performing and what top analysts think of the company following this report. Revenues came in at US$274m, in line with expectations, while statutory losses per share were substantially higher than expected, at US$0.23 per share. 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. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Entravision Communications
Following the latest results, Entravision Communications's lone analyst are now forecasting revenues of US$285.7m in 2020. This would be a credible 4.4% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Entravision Communications forecast to report a statutory profit of US$0.41 per share. Before this earnings report, analysts had been forecasting revenues of US$287.6m and earnings per share (EPS) of US$0.35 in 2020. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the nice increase in earnings per share expectations following these results.
The average analyst price target fell 25% to US$4.50, suggesting that analysts have other concerns, and the improved earnings per share outlook was not enough to allay them.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Entravision Communications's performance in recent years. We would highlight that Entravision Communications's revenue growth is expected to slow, with forecast 4.4% increase next year well below the historical 7.5%p.a. growth over the last five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.9% next year. Factoring in the forecast slowdown in growth, it looks like analysts are expecting Entravision Communications to grow at about the same rate as the wider market.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Entravision Communications following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Entravision Communications's future valuation.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2020, which can be seen for free on our platform here.
You can also view our analysis of Entravision Communications's balance sheet, and whether we think Entravision Communications is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at 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. Simply Wall St has no position in the stocks mentioned.
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