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The latest analyst coverage could presage a bad day for Hyatt Hotels Corporation (NYSE:H), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Shares are up 7.7% to US$82.26 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.
Following the downgrade, the most recent consensus for Hyatt Hotels from its twelve analysts is for revenues of US$2.9b in 2021 which, if met, would be a substantial 275% increase on its sales over the past 12 months. Losses are supposed to balloon 78% to US$3.13 per share. However, before this estimates update, the consensus had been expecting revenues of US$3.3b and US$2.59 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
The consensus price target lifted 10% to US$69.94, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer term. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Hyatt Hotels at US$83.00 per share, while the most bearish prices it at US$46.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Hyatt Hotels is forecast to grow faster in the future than it has in the past, with revenues expected to grow 275%. If achieved, this would be a much better result than the 8.6% annual decline over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 25% next year. So it looks like Hyatt Hotels is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of Hyatt Hotels.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Hyatt Hotels, including recent substantial insider selling. Learn more, and discover the 1 other concern we've identified, for free on our platform here.
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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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