Results: Subsea 7 S.A. Beat Earnings Expectations And Analysts Now Have New Forecasts

A week ago, Subsea 7 S.A. (OB:SUBC) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. The company beat forecasts, with revenue of US$1.8b, some 2.7% above estimates, and statutory earnings per share (EPS) coming in at US$0.31, 28% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Subsea 7

Taking into account the latest results, the current consensus from Subsea 7's 15 analysts is for revenues of US$7.12b in 2025. This would reflect a credible 7.9% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to jump 183% to US$1.55. Before this earnings report, the analysts had been forecasting revenues of US$7.19b and earnings per share (EPS) of US$1.59 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at kr237, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. The most optimistic Subsea 7 analyst has a price target of kr272 per share, while the most pessimistic values it at kr200. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Subsea 7's past performance and to peers in the same industry. We would highlight that Subsea 7's revenue growth is expected to slow, with the forecast 6.3% annualised growth rate until the end of 2025 being well below the historical 14% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.1% per year. Even after the forecast slowdown in growth, it seems obvious that Subsea 7 is also expected to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Subsea 7. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Subsea 7 going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Subsea 7 .

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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.