Last week, you might have seen that Elisa Oyj (HEL:ELISA) released its quarterly result to the market. The early response was not positive, with shares down 3.3% to €53.44 in the past week. It looks like the results were a bit of a negative overall. While revenues of €461m were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 4.9% to hit €0.49 per share. 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.
Following last week's earnings report, Elisa Oyj's 17 analysts are forecasting 2020 revenues to be €1.88b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be €2.02, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of €1.88b and earnings per share (EPS) of €2.04 in 2020. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at €47.06. 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 Elisa Oyj analyst has a price target of €62.00 per share, while the most pessimistic values it at €30.50. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
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 Elisa Oyj's revenue growth is expected to slow, with forecast 0.2% increase next year well below the historical 4.3%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.0% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Elisa Oyj.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Elisa Oyj. Long-term earnings power is much more important than next year's profits. We have forecasts for Elisa Oyj going out to 2024, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for Elisa Oyj (of which 1 makes us a bit uncomfortable!) you should know about.
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