Starbreeze AB (publ) Just Missed Earnings - But Analysts Have Updated Their Models

There's been a notable change in appetite for Starbreeze AB (publ) (STO:STAR B) shares in the week since its full-year report, with the stock down 20% to kr0.32. Statutory earnings per share of kr0.19 unfortunately missed expectations by 14%, although it was encouraging to see revenues of kr634m exceed expectations by 2.2%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Starbreeze after the latest results.

View our latest analysis for Starbreeze

Taking into account the latest results, the current consensus, from the twin analysts covering Starbreeze, is for revenues of kr170.5m in 2024. This implies a concerning 73% reduction in Starbreeze's revenue over the past 12 months. Earnings are expected to tip over into lossmaking territory, with the analysts forecasting statutory losses of -kr0.06 per share in 2024. Before this latest report, the consensus had been expecting revenues of kr209.3m and kr0.02 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

The consensus price target fell 11% to kr0.63, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 73% by the end of 2024. This indicates a significant reduction from annual growth of 3.0% 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 4.6% annually for the foreseeable future. It's pretty clear that Starbreeze's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Starbreeze. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Starbreeze'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 least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 4 warning signs for Starbreeze (2 are potentially serious) you should be aware of.

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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.