AU$4.27: That's What Analysts Think Uniti Group Limited (ASX:UWL) Is Worth After Its Latest Results

By
Simply Wall St
Published
February 24, 2022
ASX:UWL
Source: Shutterstock

There's been a notable change in appetite for Uniti Group Limited (ASX:UWL) shares in the week since its half-year report, with the stock down 16% to AU$3.22. Results look mixed - while revenue fell marginally short of analyst estimates at AU$109m, statutory earnings were in line with expectations, at AU$0.046 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Uniti Group

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ASX:UWL Earnings and Revenue Growth February 24th 2022

Taking into account the latest results, the current consensus from Uniti Group's eight analysts is for revenues of AU$227.7m in 2022, which would reflect a reasonable 6.0% increase on its sales over the past 12 months. Per-share earnings are expected to expand 17% to AU$0.093. Before this earnings report, the analysts had been forecasting revenues of AU$239.0m and earnings per share (EPS) of AU$0.13 in 2022. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share numbers.

It'll come as no surprise then, to learn that the analysts have cut their price target 5.4% to AU$4.27. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Uniti Group analyst has a price target of AU$4.70 per share, while the most pessimistic values it at AU$3.88. This is a very narrow spread of estimates, implying either that Uniti Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Uniti Group's revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2022 being well below the historical 87% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.1% annually. Even after the forecast slowdown in growth, it seems obvious that Uniti Group is also expected to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Uniti Group. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster 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 Uniti Group'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 Uniti Group going out to 2024, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Uniti Group , and understanding it should be part of your investment process.

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