Analysts Have Lowered Expectations For TomTom N.V. (AMS:TOM2) After Its Latest Results

There's been a notable change in appetite for TomTom N.V. (AMS:TOM2) shares in the week since its full-year report, with the stock down 17% to €7.98. The results overall were pretty much dead in line with analyst forecasts; revenues were €528m and statutory losses were €1.97 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on TomTom after the latest results.

View our latest analysis for TomTom

Taking into account the latest results, the most recent consensus for TomTom from five analysts is for revenues of €566.9m in 2021 which, if met, would be a reasonable 7.3% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 84% to €0.31. Before this earnings announcement, the analysts had been modelling revenues of €598.7m and losses of €0.27 per share in 2021. So it's pretty clear the analysts have mixed opinions on TomTom after this update; revenues were downgraded and per-share losses expected to increase.

There was no major change to the consensus price target of €11.48, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values TomTom at €23.85 per share, while the most bearish prices it at €8.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that TomTom's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 7.3%, well above its historical decline of 13% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 7.8% next year. So while TomTom's revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target held steady at €11.48, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple TomTom analysts - going out to 2025, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for TomTom that you need to take into consideration.

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