Analysts Are Upgrading Funding Circle Holdings plc (LON:FCH) After Its Latest Results

Shareholders of Funding Circle Holdings plc (LON:FCH) will be pleased this week, given that the stock price is up 20% to UK£1.67 following its latest yearly results. Revenues fell badly short of expectations, with sales of UK£104m being some 22% below what the analysts had forecast. Statutory losses were in line with forecasts, with Funding Circle Holdings losing UK£0.31 a share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Funding Circle Holdings

Taking into account the latest results, the current consensus from Funding Circle Holdings' four analysts is for revenues of UK£213.5m in 2021, which would reflect a huge 106% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 92% to UK£0.025. Before this latest report, the consensus had been expecting revenues of UK£201.9m and UK£0.028 per share in losses. So it seems there's been a definite increase in optimism about Funding Circle Holdings' future following the latest consensus numbers, with a notable improvement in the loss per share forecasts in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of UK£1.83, implying that their latest estimates don't have a long term impact on what they think the stock is worth. 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. Currently, the most bullish analyst values Funding Circle Holdings at UK£4.57 per share, while the most bearish prices it at UK£0.75. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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. It's clear from the latest estimates that Funding Circle Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 106% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 14% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 22% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Funding Circle Holdings 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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Funding Circle Holdings going out to 2025, and you can see them free on our platform here..

Before you take the next step you should know about the 2 warning signs for Funding Circle Holdings that we have uncovered.

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This article by Simply Wall St is general in nature. 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.
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