Intelsat S.A. (NYSE:I) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues of US$507m were in line with expectations, although losses per share came were US$1.05, some 20% smaller than was expected. 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. With this in mind, we’ve gathered the latest forecasts to see what analysts are expecting for next year.
Following the recent earnings report, the consensus fromnine analysts covering Intelsat expects revenues of US$2.0b in 2020, implying a measurable 4.6% decline in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$3.34 per share. Before this earnings announcement, analysts had been forecasting revenues of US$2.0b and losses of US$3.19 per share in 2020. Although the revenue estimates have not really changed, we can see there’s been a earnings per share expectations, suggesting that analysts have become more bullish after the latest result.
The consensus price target held steady at US$29.40, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company’s 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 Intelsat at US$54.00 per share, while the most bearish prices it at US$20.00. So we wouldn’t be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn’t assign too much meaning to the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how analyst forecasts compare, both to the Intelsat’s past performance and to peers in the same market. One obvious concern is that although revenues are forecast to continue shrinking, the expected 4.6% decline next year is substantially more severe than the 3.5% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue decline 1.1% next year. So it looks like Intelsat is also expected to see its revenues decline at a slower rate than the wider market.
The Bottom Line
The most important thing to take away is that analysts reconfirmed their loss per share estimates for next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Intelsat’s revenues are expected to perform worse than the wider market. 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. We have estimates – from multiple Intelsat analysts – going out to 2021, and you can see them free on our platform here.
It might also be worth considering whether Intelsat’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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