Melco International Development Limited (HKG:200) Analysts Just Slashed This Year's Revenue Estimates By 21%

One thing we could say about the analysts on Melco International Development Limited (HKG:200) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the current consensus from Melco International Development's six analysts is for revenues of HK$19b in 2022 which - if met - would reflect a notable 19% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing HK$23b of revenue in 2022. It looks like forecasts have become a fair bit less optimistic on Melco International Development, given the pretty serious reduction to revenue estimates.

See our latest analysis for Melco International Development

We'd point out that there was no major changes to their price target of HK$11.49, suggesting the latest estimates were not enough to shift their view on the value of the business. 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. The most optimistic Melco International Development analyst has a price target of HK$16.20 per share, while the most pessimistic values it at HK$8.90. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that Melco International Development's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 19% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 15% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 25% annually for the foreseeable future. So although Melco International Development's revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Melco International Development this year. They also expect company revenue to perform worse than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Melco International Development after today.

Of course, there's always more to the story. At least one of Melco International Development's six analysts has provided estimates out to 2024, which can be seen for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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