New Wave Group AB (publ) (STO:NEWA B) Just Reported And Analysts Have Been Lifting Their Price Targets

It's been a pretty great week for New Wave Group AB (publ) (STO:NEWA B) shareholders, with its shares surging 11% to kr118 in the week since its latest annual results. New Wave Group reported kr9.5b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of kr6.63 beat expectations, being 3.1% higher than what the analysts expected. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for New Wave Group

Following the latest results, New Wave Group's three analysts are now forecasting revenues of kr10.1b in 2025. This would be a satisfactory 5.6% improvement in revenue compared to the last 12 months. Per-share earnings are expected to grow 17% to kr7.79. Before this earnings report, the analysts had been forecasting revenues of kr10.0b and earnings per share (EPS) of kr7.74 in 2025. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The consensus price target rose 6.6% to kr137despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of New Wave Group's earnings by assigning a price premium. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on New Wave Group, with the most bullish analyst valuing it at kr138 and the most bearish at kr135 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that New Wave Group's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 5.6% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.4% annually. Factoring in the forecast slowdown in growth, it seems obvious that New Wave Group is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for New Wave Group going out to 2027, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for New Wave Group that you should be aware of.

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

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.