THG Plc (LON:THG) Just Reported, And Analysts Assigned A UK£1.42 Price Target

There's been a notable change in appetite for THG Plc (LON:THG) shares in the week since its interim report, with the stock down 19% to UK£0.43. Revenues were UK£1.1b, with THG reporting some 8.4% below analyst expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for THG

Taking into account the latest results, the consensus forecast from THG's eleven analysts is for revenues of UK£2.53b in 2022, which would reflect a solid 10% improvement in sales compared to the last 12 months. Losses are expected to increase slightly, to UK£0.13 per share. Before this latest report, the consensus had been expecting revenues of UK£2.61b and UK£0.11 per share in losses. So it's pretty clear the analysts have mixed opinions on THG after this update; revenues were downgraded and per-share losses expected to increase.

The average price target fell 29% to UK£1.42, implicitly signalling that lower earnings per share are a leading indicator for THG's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values THG at UK£3.70 per share, while the most bearish prices it at UK£0.45. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 21% growth on an annualised basis. That is in line with its 21% annual growth over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 13% per year. So it's pretty clear that THG is forecast to grow substantially faster than its 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 THG. 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. At Simply Wall St, we have a full range of analyst estimates for THG going out to 2024, and you can see them free on our platform here..

You still need to take note of risks, for example - THG has 4 warning signs we think 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.