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Playtika Holding Corp. (NASDAQ:PLTK) shareholders are probably feeling a little disappointed, since its shares fell 6.1% to US$24.76 in the week after its latest first-quarter results. Sales of US$639m surpassed estimates by 10.0%, although statutory earnings per share missed badly, coming in 23% below expectations at US$0.09 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus from Playtika Holding's ten analysts is for revenues of US$2.61b in 2021, which would reflect an okay 5.5% increase on its sales over the past 12 months. Statutory earnings per share are predicted to jump 228% to US$0.77. Before this earnings report, the analysts had been forecasting revenues of US$2.46b and earnings per share (EPS) of US$0.76 in 2021. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a small lift in to revenue forecasts.
Even though revenue forecasts increased, there was no change to the consensus price target of US$37.36, suggesting the analysts are focused on earnings as the driver of value creation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Playtika Holding, with the most bullish analyst valuing it at US$42.00 and the most bearish at US$30.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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 Playtika Holding's revenue growth is expected to slow, with the forecast 7.3% annualised growth rate until the end of 2021 being well below the historical 26% growth over the last year. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 16% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Playtika Holding.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. The consensus price target held steady at US$37.36, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Playtika Holding analysts - going out to 2025, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 5 warning signs for Playtika Holding (2 are a bit concerning!) that you should be aware of.
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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