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Investors in Host Hotels & Resorts, Inc. (NASDAQ:HST) had a good week, as its shares rose 4.3% to close at US$10.93 following the release of its third-quarter results. It wasn't the greatest result, with ongoing losses and revenues of US$198m falling short of analyst predictions. The losses were a relative bright spot though, with a per-share statutory loss of US$0.44 being moderately smaller than the analysts forecast. Following the result, the 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 the analysts have changed their mind on Host Hotels & Resorts after the latest results.
Taking into account the latest results, Host Hotels & Resorts' 18 analysts currently expect revenues in 2021 to be US$2.75b, approximately in line with the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 22% to US$0.65. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$2.79b and losses of US$0.60 per share in 2021. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although sales forecasts held steady, the consensus also made a to its losses per share forecasts.
As a result, there was no major change to the consensus price target of US$12.57, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Host Hotels & Resorts at US$16.00 per share, while the most bearish prices it at US$8.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. From these estimates it looks as though the analysts expect the years of declining sales to come to an end, given the flat revenue forecast for next year. That would be a definite improvement, given that the past five years have seen sales shrink five years annually. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 6.0% next year. Although Host Hotels & Resorts' revenues are expected to improve, it seems that it is still expected to grow slower than the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Host Hotels & Resorts. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Host Hotels & Resorts' revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$12.57, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Host Hotels & Resorts going out to 2024, and you can see them free on our platform here.
Even so, be aware that Host Hotels & Resorts is showing 1 warning sign in our investment analysis , you should know about...
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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