Last week saw the newest full-year earnings release from EchoStar Corporation (NASDAQ:SATS), an important milestone in the company's journey to build a stronger business. Things were not great overall, with a surprise (statutory) loss of US$0.41 per share on revenues of US$1.9b, even though the analysts had been expecting a profit. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the three analysts covering EchoStar are now predicting revenues of US$1.95b in 2021. If met, this would reflect a modest 3.5% improvement in sales compared to the last 12 months. EchoStar is also expected to turn profitable, with statutory earnings of US$0.31 per share. Before this earnings report, the analysts had been forecasting revenues of US$2.00b and earnings per share (EPS) of US$0.33 in 2021. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.
Despite the cuts to forecast earnings, there was no real change to the US$36.67 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on EchoStar, with the most bullish analyst valuing it at US$55.00 and the most bearish at US$27.00 per share. 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. One thing stands out from these estimates, which is that EchoStar is forecast to grow faster in the future than it has in the past, with revenues expected to grow 3.5%. If achieved, this would be a much better result than the 3.5% annual decline over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 4.8% next year. Although EchoStar's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the wider industry.
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. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than 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 in mind, we wouldn't be too quick to come to a conclusion on EchoStar. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple EchoStar analysts - going out to 2022, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for EchoStar that you should be aware 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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