It's been a good week for VEON Ltd. (NASDAQ:VEON) shareholders, because the company has just released its latest first-quarter results, and the shares gained 4.0% to US$1.80. 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.
After the latest results, the eleven analysts covering VEON are now predicting revenues of US$8.17b in 2021. If met, this would reflect a satisfactory 3.7% improvement in sales compared to the last 12 months. VEON is also expected to turn profitable, with statutory earnings of US$0.44 per share. Before this earnings report, the analysts had been forecasting revenues of US$8.16b and earnings per share (EPS) of US$0.35 in 2021. Although the revenue estimates have not really changed, we can see there's been a sizeable expansion in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The consensus price target was unchanged at US$2.24, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values VEON at US$5.30 per share, while the most bearish prices it at US$1.60. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the VEON's past performance and to peers in the same industry. One thing stands out from these estimates, which is that VEON is forecast to grow faster in the future than it has in the past, with revenues expected to display 5.0% annualised growth until the end of 2021. If achieved, this would be a much better result than the 2.4% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 4.3% annually. So while VEON's revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards VEON following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$2.24, 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 VEON going out to 2024, and you can see them free on our platform here.
You can also see whether VEON is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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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