There's been a notable change in appetite for Hersha Hospitality Trust (NYSE:HT) shares in the week since its annual report, with the stock down 15% to US$11.96. Sales hit US$530m in line with forecasts, although the company reported a statutory loss per share of US$0.74 that was somewhat smaller than analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
Taking into account the latest results, the latest consensus from Hersha Hospitality Trust's eight analysts is for revenues of US$541.2m in 2020, which would reflect a modest 2.1% improvement in sales compared to the last 12 months. Statutory losses are expected to increase substantially, hitting US$0.63. per share. Before this earnings announcement, analysts had been forecasting revenues of US$541.9m and losses of US$0.45 per share in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.
The consensus price target held steady at US$14.05, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Hersha Hospitality Trust, with the most bullish analyst valuing it at US$16.50 and the most bearish at US$12.50 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
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. It's pretty clear that analysts expect Hersha Hospitality Trust's revenue growth will slow down substantially, with revenues next year expected to grow 2.1%, compared to a historical growth rate of 3.5% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 4.9% next year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Hersha Hospitality Trust to grow slower than the wider market.
The Bottom Line
The most obvious conclusion is that analysts made no changes to their forecasts for a loss next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Hersha Hospitality Trust'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.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Hersha Hospitality Trust going out to 2021, and you can see them free on our platform here.
You can also view our analysis of Hersha Hospitality Trust's balance sheet, and whether we think Hersha Hospitality Trust is carrying too much debt, for free on our platform here.
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