Market forces rained on the parade of lastminute.com N.V. (VTX:LMN) shareholders today, when the covering analyst downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.
Following the latest downgrade, the lone analyst covering lastminute.com provided consensus estimates of €155m revenue in 2020, which would reflect a stressful 55% decline on its sales over the past 12 months. After this downgrade, the company is anticipated to report a loss of €1.48 in 2020, a sharp decline from a profit over the last year. Yet before this consensus update, the analyst had been forecasting revenues of €198m and losses of €1.13 per share in 2020. Ergo, there's been a clear change in sentiment, with the analyst administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
The consensus price target fell 21% to €22.61, implicitly signalling that lower earnings per share are a leading indicator for lastminute.com's valuation.
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. We would highlight that sales are expected to reverse, with the forecast 55% revenue decline a notable change from historical growth of 11% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 18% annually for the foreseeable future. It's pretty clear that lastminute.com's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analyst increased their loss per share estimates for this year. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that lastminute.com's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of lastminute.com.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for lastminute.com going out as far as 2021, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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. Thank you for reading.