Last week, you might have seen that boohoo group plc (LON:BOO) released its full-year result to the market. The early response was not positive, with shares down 6.6% to UK£3.18 in the past week. Results were roughly in line with estimates, with revenues of UK£1.7b and statutory earnings per share of UK£0.072. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, boohoo group's 19 analysts are now forecasting revenues of UK£2.25b in 2022. This would be a major 29% improvement in sales compared to the last 12 months. Per-share earnings are expected to swell 19% to UK£0.088. In the lead-up to this report, the analysts had been modelling revenues of UK£2.25b and earnings per share (EPS) of UK£0.096 in 2022. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at UK£4.58, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. Currently, the most bullish analyst values boohoo group at UK£6.45 per share, while the most bearish prices it at UK£2.80. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that boohoo group's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 29% growth on an annualised basis. This is compared to a historical growth rate of 39% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 15% annually. Even after the forecast slowdown in growth, it seems obvious that boohoo group is also expected to grow faster than 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 boohoo group. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at UK£4.58, with the latest estimates not enough to have an impact on their price targets.
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 boohoo group going out to 2026, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 2 warning signs for boohoo group (1 is concerning!) that you need to be mindful 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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