Lamprell plc (LON:LAM) Just Reported Earnings, And Analysts Cut Their Target Price

There's been a major selloff in Lamprell plc (LON:LAM) shares in the week since it released its annual report, with the stock down 29% to UK£0.46. Revenues were in line with expectations, at US$339m, while statutory losses ballooned to US$0.16 per share. 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 Lamprell

Taking into account the latest results, the consensus forecast from Lamprell's three analysts is for revenues of US$471.7m in 2021, which would reflect a substantial 39% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 65% to US$0.054. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$490.0m and losses of US$0.04 per share in 2021. So it's pretty clear the analysts have mixed opinions on Lamprell after this update; revenues were downgraded and per-share losses expected to increase.

The average price target fell 9.1% to UK£0.89, implicitly signalling that lower earnings per share are a leading indicator for Lamprell's valuation. 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 Lamprell, with the most bullish analyst valuing it at UK£1.01 and the most bearish at UK£0.75 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Lamprell's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 39% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 31% 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 4.5% per year. Not only are Lamprell'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 note is the forecast of increased losses next year, suggesting all may not be well at Lamprell. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Lamprell analysts - going out to 2023, and you can see them free on our platform here.

Even so, be aware that Lamprell is showing 1 warning sign in our investment analysis , you should know about...

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