Last week, you might have seen that zooplus AG (ETR:ZO1) released its half-year result to the market. The early response was not positive, with shares down 3.8% to €95.00 in the past week. It was a pretty bad result overall; while revenues were in line with expectations at €727m, losses exploded to €0.29 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. With this in mind, we've gathered the latest forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the latest consensus from zooplus's nine analysts is for revenues of €1.54b in 2019, which would reflect an okay 4.2% improvement in sales compared to the last 12 months. The loss per share is expected to ameliorate slightly, reducing to €1.03. Yet prior to the latest earnings, analysts had been forecasting revenues of €1.54b and losses of €1.01 per share in 2019. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the earnings per share expectations following these results.
The consensus price target held steady at €112, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. 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. The most optimistic zooplus analyst has a price target of €185 per share, while the most pessimistic values it at €58.00. With such a wide range in price targets, analysts are almost certainly baking in outcomes as diverse as total success and probable failure in the underlying business. With this in mind, we wouldn't assign too much meaning to the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. We would highlight that zooplus's revenue growth is expected to slow, with forecast 4.2% increase next year well below the historical 20%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 27% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect zooplus to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that analysts reconfirmed their loss per share estimates for next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that zooplus's revenues are expected to perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on zooplus. Long-term earnings power is much more important than next year's profits. We have forecasts for zooplus going out to 2023, and you can see them free on our platform here.
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