Earnings Release: Here's Why Analysts Cut Their Relais Group Oyj (HEL:RELAIS) Price Target To €15.00

It's shaping up to be a tough period for Relais Group Oyj (HEL:RELAIS), which a week ago released some disappointing second-quarter results that could have a notable impact on how the market views the stock. It was a pretty negative result overall, with revenues of €59m missing analyst predictions by 2.3%. Worse, the business reported a statutory loss of €0.14 per share, much larger than the analysts had forecast prior to the result. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Relais Group Oyj

Following the latest results, Relais Group Oyj's three analysts are now forecasting revenues of €264.2m in 2022. This would be an okay 4.6% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to dip 8.4% to €0.16 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of €267.9m and earnings per share (EPS) of €0.36 in 2022. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.

The average price target fell 27% to €15.00, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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. There are some variant perceptions on Relais Group Oyj, with the most bullish analyst valuing it at €16.00 and the most bearish at €14.50 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

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. We would highlight that Relais Group Oyj's revenue growth is expected to slow, with the forecast 9.4% annualised growth rate until the end of 2022 being well below the historical 40% 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 5.0% annually. So it's pretty clear that, while Relais Group Oyj's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Relais Group Oyj. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Relais Group Oyj analysts - going out to 2024, and you can see them free on our platform here.

Before you take the next step you should know about the 4 warning signs for Relais Group Oyj (2 are a bit unpleasant!) that we have uncovered.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.