Target Hospitality Corp. (NASDAQ:TH) Analysts Are More Bearish Than They Used To Be
The analysts covering Target Hospitality Corp. (NASDAQ:TH) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the latest downgrade, the current consensus, from the dual analysts covering Target Hospitality, is for revenues of US$408m in 2024, which would reflect a disturbing 31% reduction in Target Hospitality's sales over the past 12 months. Statutory earnings per share are supposed to nosedive 57% to US$0.71 in the same period. Prior to this update, the analysts had been forecasting revenues of US$456m and earnings per share (EPS) of US$0.91 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.
Check out our latest analysis for Target Hospitality
The consensus price target fell 22% to US$15.67, with the weaker earnings outlook clearly leading analyst valuation estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Target Hospitality's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 26% by the end of 2024. This indicates a significant reduction from annual growth of 18% 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 10% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Target Hospitality is expected to lag the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Target Hospitality. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
There might be good reason for analyst bearishness towards Target Hospitality, like concerns around earnings quality. For more information, you can click here to discover this and the 1 other risk we've identified.
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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.
