Starbreeze AB (publ) (STO:STAR B) Just Reported, And Analysts Assigned A kr0.50 Price Target

Starbreeze AB (publ) (STO:STAR B) came out with its second-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues of kr40m beat expectations by a respectable 7.2%, although statutory losses per share increased. Starbreeze lost kr0.05, which was 25% more than what the analysts had included in their models. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Starbreeze

Taking into account the latest results, the current consensus, from the twin analysts covering Starbreeze, is for revenues of kr190.2m in 2024. This implies a stressful 71% reduction in Starbreeze's revenue over the past 12 months. The company is forecast to report a statutory loss of kr0.14 in 2024, a sharp decline from a profit over the last year. Yet prior to the latest earnings, the analysts had been forecasting revenues of kr187.1m and losses of kr0.02 per share in 2024. So it's pretty clear the analysts have mixed opinions on Starbreeze even after this update; although they reconfirmed their revenue numbers, it came at the cost of a sizeable expansion in per-share losses.

The consensus price target fell 29% to kr0.50per share, with the analysts clearly concerned by ballooning losses.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that revenue is expected to reverse, with a forecast 92% annualised decline to the end of 2024. That is a notable change from historical growth of 24% 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 5.1% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Starbreeze is expected to lag 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Starbreeze'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 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 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Starbreeze (1 can't be ignored!) that you need to be mindful 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.