Studio City International Holdings Limited Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
A week ago, Studio City International Holdings Limited (NYSE:MSC) came out with a strong set of yearly numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 2.9% to hit US$627m. Studio City International Holdings also reported a statutory profit of US$0.56, which was an impressive 25% above what analysts had forecast. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Studio City International Holdings
Taking into account the latest results, the current consensus, from the twin analysts covering Studio City International Holdings, is for revenues of US$479.2m in 2020, which would reflect a painful 24% reduction in Studio City International Holdings's sales over the past 12 months. Earnings are expected to tip over into lossmaking territory, with analysts forecasting statutory losses of -US$0.30 per share in 2020. Before this earnings report, analysts had been forecasting revenues of US$579.1m and earnings per share (EPS) of US$1.03 in 2020. There looks to have been a major change in sentiment regarding Studio City International Holdings's prospects following the latest results, with a substantial drop in to revenues and analysts now forecasting a loss instead of a profit.
There was no major change to the consensus price target of US$16.55, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts.
Further, we can compare these estimates to past performance, and see how Studio City International Holdings forecasts compare to the wider market's forecast performance. These estimates imply that sales are expected to slow, with a forecast revenue decline of 24% a significant reduction from annual growth of 27% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 8.2% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Studio City International Holdings to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that analysts are expecting Studio City International Holdings to become unprofitable next year. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$16.55, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Studio City International Holdings going out as far as 2021, and you can see them free on our platform here.
You can also view our analysis of Studio City International Holdings's balance sheet, and whether we think Studio City International Holdings is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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