Last week, you might have seen that Telia Company AB (publ) (STO:TELIA) released its first-quarter result to the market. The early response was not positive, with shares down 4.8% to kr33.86 in the past week. Statutory earnings per share fell badly short of expectations, coming in at kr0.27, some 38% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at kr22b. The 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 the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Telia Company's 20 analysts is for revenues of kr89.9b in 2020, which would reflect a credible 2.7% improvement in sales compared to the last 12 months. Per-share earnings are expected to swell 15% to kr1.87. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr90.1b and earnings per share (EPS) of kr2.03 in 2020. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at kr36.75, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Telia Company analyst has a price target of kr45.80 per share, while the most pessimistic values it at kr30.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Telia Company'sgrowth to accelerate, with the forecast 2.7% growth ranking favourably alongside historical growth of 1.6% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.4% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Telia Company is expected to grow at about the same rate as the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Telia Company. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Telia Company going out to 2024, and you can see them free on our platform here..
Plus, you should also learn about the 4 warning signs we've spotted with Telia Company .
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