Starbreeze AB (publ) Just Reported A Surprise Profit And Analysts Updated Their Estimates

As you might know, Starbreeze AB (publ) (STO:STAR B) recently reported its second-quarter numbers. In addition to smashing expectations with revenues of kr43m, Starbreeze delivered a surprise statutory profit of kr0.03 per share, a notable improvement compared to analyst expectations of a loss. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Starbreeze

Taking into account the latest results, the current consensus from Starbreeze's two analysts is for revenues of kr597.9m in 2023. This would reflect a major 320% increase on its revenue over the past 12 months. Earnings are expected to improve, with Starbreeze forecast to report a statutory profit of kr0.30 per share. In the lead-up to this report, the analysts had been modelling revenues of kr592.9m and earnings per share (EPS) of kr0.26 in 2023. Although the revenue estimates have not really changed, we can see there's been a decent improvement in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

The average the analysts price target fell 20% to kr1.23, suggesting thatthe analysts have other concerns, and the improved earnings per share outlook was not enough to allay them.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that Starbreeze's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 17x growth to the end of 2023 on an annualised basis. That is well above its historical decline of 28% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 6.4% per year. So it looks like Starbreeze is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Starbreeze's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster 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 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. We have analyst estimates for Starbreeze going out as far as 2025, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Starbreeze you should be aware of, and 1 of them is potentially serious.

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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.