News Flash: 4 Analysts Think Braemar Hotels & Resorts, Inc. (NYSE:BHR) Earnings Are Under Threat
Today is shaping up negative for Braemar Hotels & Resorts, Inc. (NYSE:BHR) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business. Bidders are definitely seeing a different story, with the stock price of US$3.04 reflecting a 14% rise in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.
After the downgrade, the consensus from Braemar Hotels & Resorts' four analysts is for revenues of US$208m in 2020, which would reflect a painful 54% decline in sales compared to the last year of performance. Losses are supposed to balloon 474% to US$3.97 per share. However, before this estimates update, the consensus had been expecting revenues of US$331m and US$2.95 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.
View our latest analysis for Braemar Hotels & Resorts
The consensus price target fell 10% to US$5.75, implicitly signalling that lower earnings per share are a leading indicator for Braemar Hotels & Resorts' 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 Braemar Hotels & Resorts, with the most bullish analyst valuing it at US$9.00 and the most bearish at US$2.75 per share. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast revenue decline of 54%, a significant reduction from annual growth of 6.1% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.1% next year. It's pretty clear that Braemar Hotels & Resorts' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Braemar Hotels & Resorts. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Braemar Hotels & Resorts.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Braemar Hotels & Resorts analysts - going out to 2022, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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