Starrag Group Holding AG (VTX:STGN) Just Reported And Analysts Have Been Cutting Their Estimates

It's been a good week for Starrag Group Holding AG (VTX:STGN) shareholders, because the company has just released its latest half-year results, and the shares gained 7.1% to CHF48.00. It was a negative result overall, with revenues coming in 16% less than what the analyst expected, at CHF139m. Following the result, the analyst has 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've gathered the most recent statutory forecasts to see whether the analyst has changed their earnings models, following these results.

View our latest analysis for Starrag Group Holding

After the latest results, the solitary analyst covering Starrag Group Holding are now predicting revenues of CHF300.0m in 2021. If met, this would reflect an okay 6.8% improvement in sales compared to the last 12 months. Starrag Group Holding is also expected to turn profitable, with statutory earnings of CHF1.26 per share. In the lead-up to this report, the analyst had been modelling revenues of CHF325.0m and earnings per share (EPS) of CHF2.39 in 2021. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.

What's most unexpected is that the consensus price target rose 11% to CHF50.00, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

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. For example, we noticed that Starrag Group Holding's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 14% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 3.7% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 6.3% per year. Not only are Starrag Group Holding's revenues expected to improve, it seems that the analyst is also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although industry data suggests that Starrag Group Holding's revenues are expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analyst believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Starrag Group Holding going out as far as 2023, and you can see them free on our platform here.

It might also be worth considering whether Starrag Group Holding's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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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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