Chemtrade Logistics Income Fund (TSE:CHE.UN) Just Reported And Analysts Have Been Lifting Their Price Targets

The analysts might have been a bit too bullish on Chemtrade Logistics Income Fund (TSE:CHE.UN), given that the company fell short of expectations when it released its quarterly results last week. It definitely looks like a negative result overall with revenues falling 11% short of analyst estimates at CA$312m. Statutory losses were CA$0.21 per share, 85% bigger than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Chemtrade Logistics Income Fund

Taking into account the latest results, the current consensus from Chemtrade Logistics Income Fund's six analysts is for revenues of CA$1.44b in 2021, which would reflect a decent 8.3% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 76% to CA$0.23. Before this latest report, the consensus had been expecting revenues of CA$1.44b and CA$0.25 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.

The average price target rose 15% to CA$9.38, with the analysts signalling that the forecast reduction in losses would be a positive for the stock'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 Chemtrade Logistics Income Fund analyst has a price target of CA$12.00 per share, while the most pessimistic values it at CA$7.50. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Chemtrade Logistics Income Fund's growth to accelerate, with the forecast 11% annualised growth to the end of 2021 ranking favourably alongside historical growth of 6.9% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Chemtrade Logistics Income Fund is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Chemtrade Logistics Income Fund. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Chemtrade Logistics Income Fund going out to 2022, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 3 warning signs for Chemtrade Logistics Income Fund that you should be aware of.

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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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