What Does The Future Hold For HOCHTIEF Aktiengesellschaft (ETR:HOT)? These Analysts Have Been Cutting Their Estimates

Today is shaping up negative for HOCHTIEF Aktiengesellschaft (ETR:HOT) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the consensus from seven analysts covering HOCHTIEF is for revenues of €22b in 2021, implying a discernible 4.3% decline in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 24% to €7.65. Previously, the analysts had been modelling revenues of €25b and earnings per share (EPS) of €7.79 in 2021. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a substantial drop in revenues and reconfirming their earnings per share estimates.

View our latest analysis for HOCHTIEF

The average price target was steady at €92.79 even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic HOCHTIEF analyst has a price target of €124 per share, while the most pessimistic values it at €70.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 4.3% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 5.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.7% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - HOCHTIEF is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of HOCHTIEF going forwards.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple HOCHTIEF analysts - going out to 2023, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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