Results: Lendlease Group Delivered A Surprise Loss And Now Analysts Have New Forecasts
It's been a mediocre week for Lendlease Group (ASX:LLC) shareholders, with the stock dropping 15% to AU$6.20 in the week since its latest half-year results. Revenues came in well ahead of expectations at AU$4.8b, although statutory earnings per share fell badly short. Lendlease Group reported a loss of AU$0.20 per share, whereas the analysts had previously expected a profit. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
View our latest analysis for Lendlease Group
Taking into account the latest results, the consensus forecast from Lendlease Group's nine analysts is for revenues of AU$10.9b in 2024. This reflects a credible 7.3% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Lendlease Group forecast to report a statutory profit of AU$0.67 per share. In the lead-up to this report, the analysts had been modelling revenues of AU$10.4b and earnings per share (EPS) of AU$0.82 in 2024. So it's pretty clear the analysts have mixed opinions on Lendlease Group after the latest results; even though they upped their revenue numbers, it came at the cost of a substantial drop in per-share earnings expectations.
The analysts also cut Lendlease Group's price target 11% to AU$7.98, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in revenue. 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. There are some variant perceptions on Lendlease Group, with the most bullish analyst valuing it at AU$13.30 and the most bearish at AU$7.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Lendlease Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 15% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 10% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 7.5% annually. So it looks like Lendlease Group 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 the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Lendlease Group's future valuation.
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 forecasts for Lendlease Group going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Lendlease Group that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
