Analysts Have Just Cut Their TUI AG (ETR:TUI1) Revenue Estimates By 31%

Market forces rained on the parade of TUI AG (ETR:TUI1) shareholders today, when the analysts downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

After this downgrade, TUI's 17 analysts are now forecasting revenues of €7.9b in 2021. This would be a major 74% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing €12b of revenue in 2021. It looks like forecasts have become a fair bit less optimistic on TUI, given the pretty serious reduction to revenue estimates.

View our latest analysis for TUI

There was no particular change to the consensus price target of €2.58, with TUI's latest outlook seemingly not enough to result in a change of valuation. 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. There are some variant perceptions on TUI, with the most bullish analyst valuing it at €4.40 and the most bearish at €0.90 per share. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that TUI is forecast to grow faster in the future than it has in the past, with revenues expected to display 202% annualised growth until the end of 2021. If achieved, this would be a much better result than the 6.0% annual decline 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 15% per year. So it looks like TUI is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for TUI this year. Analysts also expect revenues to grow faster than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of TUI going forwards.

There might be good reason for analyst bearishness towards TUI, like major dilution from new stock issuance in the past year. Learn more, and discover the 1 other flag we've identified, for 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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