Earnings Update: Here's Why Analysts Just Lifted Their ACEA S.p.A. (BIT:ACE) Price Target To €15.98

It's been a good week for ACEA S.p.A. (BIT:ACE) shareholders, because the company has just released its latest full-year results, and the shares gained 8.7% to €14.94. It was a workmanlike result, with revenues of €4.6b coming in 4.0% ahead of expectations, and statutory earnings per share of €1.38, in line with analyst appraisals. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for ACEA

Taking into account the latest results, the four analysts covering ACEA provided consensus estimates of €4.49b revenue in 2024, which would reflect a small 3.5% decline over the past 12 months. Statutory per-share earnings are expected to be €1.40, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of €4.45b and earnings per share (EPS) of €1.41 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The consensus price target rose 13% to €15.98despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of ACEA's earnings by assigning a price premium. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic ACEA analyst has a price target of €17.50 per share, while the most pessimistic values it at €14.30. This is a very narrow spread of estimates, implying either that ACEA is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the ACEA's past performance and to peers in the same industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 3.5% by the end of 2024. This indicates a significant reduction from annual growth of 13% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 0.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - ACEA is expected to lag the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that ACEA's revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on ACEA. Long-term earnings power is much more important than next year's profits. We have forecasts for ACEA going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for ACEA (1 is significant) 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.