Vista Group International Limited (NZSE:VGL) Just Reported And Analysts Have Been Lifting Their Price Targets

Investors in Vista Group International Limited (NZSE:VGL) had a good week, as its shares rose 5.0% to close at NZ$2.53 following the release of its interim results. The result was fairly weak overall, with revenues of NZ$70m being 7.0% less than what the analysts had been modelling. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Vista Group International after the latest results.

See our latest analysis for Vista Group International

Taking into account the latest results, the most recent consensus for Vista Group International from five analysts is for revenues of NZ$150.2m in 2024. If met, it would imply an okay 5.1% increase on its revenue over the past 12 months. Vista Group International is also expected to turn profitable, with statutory earnings of NZ$0.0019 per share. Before this earnings announcement, the analysts had been modelling revenues of NZ$153.4m and losses of NZ$0.0097 per share in 2024. Although the analysts have reduced their revenue expectations, they now expect the business to reach profitability sooner than previously assumed, which makes it look as though there's been a pretty serious improvement in sentiment following the latest results.

The average price target rose 22% to NZ$2.70, with the analysts signalling that the improved earnings outlook is the key driver of value for shareholders - enough to offset the reduction in revenue estimates. 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 Vista Group International at NZ$3.30 per share, while the most bearish prices it at NZ$2.20. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Vista Group International's rate of growth is expected to accelerate meaningfully, with the forecast 10% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 3.3% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Vista Group International is expected to grow slower than the wider industry.

The Bottom Line

The most important thing to take away is that there's been a clear step-change in belief around the business' prospects, with the analysts now expecting Vista Group International to become profitable next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Yet - earnings are more important to the intrinsic value of the business. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Vista Group International analysts - going out to 2026, and you can see them free on our platform here.

It might also be worth considering whether Vista Group International's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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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.

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