Hostelworld Group plc (LON:HSW) Released Earnings Last Week And Analysts Lifted Their Price Target To UK£2.56

Last week saw the newest yearly earnings release from Hostelworld Group plc (LON:HSW), an important milestone in the company's journey to build a stronger business. Sales hit €70m in line with forecasts, although the company reported a statutory loss per share of €0.15 that was somewhat smaller than the analysts expected. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Hostelworld Group

After the latest results, the six analysts covering Hostelworld Group are now predicting revenues of €85.2m in 2023. If met, this would reflect a substantial 22% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 71% to €0.043. Before this latest report, the consensus had been expecting revenues of €85.2m and €0.043 per share in losses.

The average price target fell 30% to UK£2.56, with the ongoing losses seemingly a concern for the analysts, despite the lack of real change to the earnings forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Hostelworld Group at UK£3.79 per share, while the most bearish prices it at UK£1.99. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Hostelworld Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 22% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 24% 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 9.3% per year. Not only are Hostelworld Group's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Hostelworld Group. Long-term earnings power is much more important than next year's profits. We have forecasts for Hostelworld Group going out to 2025, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Hostelworld Group that you should be aware of.

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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.