Revenue Beat: Informa plc Beat Analyst Estimates By 8.2%
Last week, you might have seen that Informa plc (LON:INF) released its half-year result to the market. The early response was not positive, with shares down 9.7% to UK£3.62 in the past week. It was a workmanlike result, with revenues of UK£814m coming in 8.2% ahead of expectations, and statutory earnings per share of UK£0.18, in line with analyst appraisals. 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.
Check out our latest analysis for Informa
Taking into account the latest results, the 16 analysts covering Informa provided consensus estimates of UK£1.71b revenue in 2020, which would reflect a disturbing 26% decline on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 36% to UK£0.36. Before this earnings announcement, the analysts had been modelling revenues of UK£1.86b and losses of UK£0.045 per share in 2020. While this year's revenue estimates dropped there was also a loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The consensus price target fell 5.6% to UK£5.27, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. The most optimistic Informa analyst has a price target of UK£6.30 per share, while the most pessimistic values it at UK£2.77. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 26%, a significant reduction from annual growth of 20% 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 8.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Informa is expected to lag the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Informa. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Informa's future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Informa going out to 2023, 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 3 warning signs for Informa (1 is a bit unpleasant!) 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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