Spark New Zealand Limited (NZSE:SPK) Just Reported Earnings, And Analysts Cut Their Target Price

Shareholders in Spark New Zealand Limited (NZSE:SPK) had a terrible week, as shares crashed 20% to NZ$2.38 in the week since its latest half-yearly results. Results were roughly in line with estimates, with revenues of NZ$1.9b and statutory earnings per share of NZ$0.17. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Spark New Zealand

Following the recent earnings report, the consensus from eight analysts covering Spark New Zealand is for revenues of NZ$3.75b in 2025. This implies a discernible 2.0% decline in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 28% to NZ$0.13. Yet prior to the latest earnings, the analysts had been anticipated revenues of NZ$3.77b and earnings per share (EPS) of NZ$0.18 in 2025. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.

The average price target fell 13% to NZ$3.14, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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 Spark New Zealand at NZ$4.25 per share, while the most bearish prices it at NZ$2.40. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Spark New Zealand'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 4.0% by the end of 2025. This indicates a significant reduction from annual growth of 2.8% 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 3.4% annually for the foreseeable future. It's pretty clear that Spark New Zealand's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Spark New Zealand's revenue is expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Spark New Zealand's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Spark New Zealand going out to 2027, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Spark New Zealand (at least 1 which can't be ignored) , and understanding them should be part of your investment process.

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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.