Analyst Forecasts Just Became More Bearish On Unibail-Rodamco-Westfield SE (AMS:URW)

Today is shaping up negative for Unibail-Rodamco-Westfield SE (AMS:URW) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Surprisingly the share price has been buoyant, rising 37% to €58.66 in the past 7 days. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

After this downgrade, Unibail-Rodamco-Westfield's twelve analysts are now forecasting revenues of €2.2b in 2020. This would be a decent 11% improvement in sales compared to the last 12 months. Losses are supposed to balloon 22% to €45.79 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of €2.5b and losses of €42.87 per share in 2020. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

View our latest analysis for Unibail-Rodamco-Westfield

The consensus price target was broadly unchanged at €49.57, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Unibail-Rodamco-Westfield at €148 per share, while the most bearish prices it at €18.90. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. Next year brings more of the same, according to the analysts, with revenue forecast to grow 11%, in line with its 11% annual growth over the past five years. Compare this with the wider industry (in aggregate), which analyst estimates suggest will see revenues fall 0.3% next year. So not only is Unibail-Rodamco-Westfield expected to maintain its revenue growth despite the wider downturn, it's also forecast to grow faster than the industry as a whole.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Unibail-Rodamco-Westfield. Sadly they also cut their revenue estimates, although at least the company is expected to perform a bit better 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 Unibail-Rodamco-Westfield after today.

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 Unibail-Rodamco-Westfield analysts - going out to 2022, and you can see them 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.

When trading Unibail-Rodamco-Westfield or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.