It’s been a sad week for Hersha Hospitality Trust (NYSE:HT), who’ve watched their investment drop 15% to US$11.96 in the week since the company reported its full-year result. The results look positive overall; while revenues of US$530m were in line with analyst predictions, statutory losses were 2.1% smaller than expected, with Hersha Hospitality Trust losing US$0.74 per share. This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether analysts have changed their mind on Hersha Hospitality Trust after the latest results.
Following the latest results, Hersha Hospitality Trust’s eight analysts are now forecasting revenues of US$541.2m in 2020. This would be a modest 2.1% improvement in sales compared to the last 12 months. Per-share statutory losses are expected to see a sharp uptick, reaching US$0.63. Yet prior to the latest earnings, analysts had been forecasting revenues of US$541.9m and losses of US$0.45 per share in 2020. So there’s definitely been a decline in analyst sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
As a result, there was no major change to the consensus price target of US$14.05, with analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. 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. There are some variant perceptions on Hersha Hospitality Trust, with the most bullish analyst valuing it at US$16.50 and the most bearish at US$12.50 per share. The narrow spread of estimates could suggest that the business’ future is relatively easy to value, or that analysts have a clear view on its prospects.
In addition, we can look to Hersha Hospitality Trust’s past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. We would highlight that Hersha Hospitality Trust’s revenue growth is expected to slow, with forecast 2.1% increase next year well below the historical 3.5%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 4.9% per year. So it’s pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Hersha Hospitality Trust.
The Bottom Line
The most obvious conclusion is that analysts made no changes to their forecasts for a loss next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Hersha Hospitality Trust’s revenues are expected to perform worse than the wider market. The consensus price target held steady at US$14.05, with the latest estimates not enough to have an impact on analysts’ estimated valuations.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have estimates – from multiple Hersha Hospitality Trust analysts – going out to 2021, and you can see them free on our platform here.
It might also be worth considering whether Hersha Hospitality Trust’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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