The analysts covering Jet2 plc (LON:JET2) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. The stock price has risen 6.7% to UK£11.48 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
Following the downgrade, the latest consensus from Jet2's five analysts is for revenues of UK£1.4b in 2022, which would reflect a sizeable 245% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£1.6b in 2022. It looks like forecasts have become a fair bit less optimistic on Jet2, given the substantial drop in revenue estimates.
View our latest analysis for Jet2
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. It's clear from the latest estimates that Jet2's rate of growth is expected to accelerate meaningfully, with the forecast 245% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 5.7% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 33% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Jet2 is expected to grow much faster than its industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Jet2 this year. They're also forecasting more rapid revenue growth than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Jet2 after today.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Jet2, including recent substantial insider selling. For more information, you can click here to discover this and the 3 other flags we've identified.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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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About AIM:JET2
Jet2
Engages in the leisure travel business primarily in the United Kingdom.
Very undervalued with flawless balance sheet.
