Shareholders might have noticed that CyrusOne Inc. (NASDAQ:CONE) filed its quarterly result this time last week. The early response was not positive, with shares down 3.5% to US$70.18 in the past week. It looks like a credible result overall – although revenues of US$246m were what the analysts expected, CyrusOne surprised by delivering a statutory profit of US$0.13 per share, instead of the previously forecast loss. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for CyrusOne from 14 analysts is for revenues of US$1.03b in 2020 which, if met, would be a satisfactory 2.8% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 90% to US$0.03. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$1.04b and losses of US$0.016 per share in 2020. While this year’s revenue estimates held steady, 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 held steady at US$71.47, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company’s valuation. 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. The most optimistic CyrusOne analyst has a price target of US$82.00 per share, while the most pessimistic values it at US$58.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await CyrusOne shareholders.
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. We would highlight that CyrusOne’s revenue growth is expected to slow, with forecast 2.8% increase next year well below the historical 22%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.3% next year. Factoring in the forecast slowdown in growth, it seems obvious that CyrusOne is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at CyrusOne. On the plus side, there were no major changes to revenue estimates; although 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 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 CyrusOne going out to 2024, and you can see them free on our platform here..
Don’t forget that there may still be risks. For instance, we’ve identified 3 warning signs for CyrusOne that you should be aware of.
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