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.
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.
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