Earnings Update: StarHub Ltd (SGX:CC3) Just Reported Its Second-Quarter Results And Analysts Are Updating Their Forecasts

StarHub Ltd (SGX:CC3) shareholders are probably feeling a little disappointed, since its shares fell 3.3% to S$1.18 in the week after its latest quarterly results. It was a workmanlike result, with revenues of S$588m coming in 4.1% ahead of expectations, and statutory earnings per share of S$0.088, in line with analyst appraisals. 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.

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Following last week's earnings report, StarHub's twelve analysts are forecasting 2025 revenues to be S$2.37b, approximately in line with the last 12 months. Statutory earnings per share are predicted to increase 9.5% to S$0.075. Before this earnings report, the analysts had been forecasting revenues of S$2.41b and earnings per share (EPS) of S$0.092 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 substantial drop in EPS estimates.

Check out our latest analysis for StarHub

The consensus price target held steady at S$1.21, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values StarHub at S$1.38 per share, while the most bearish prices it at S$1.06. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting StarHub is an easy business to forecast or the the analysts are all using similar assumptions.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 1.5% by the end of 2025. This indicates a significant reduction from annual growth of 3.9% 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 - StarHub is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for StarHub. 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 no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 forecasts for StarHub going out to 2027, 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 2 warning signs for StarHub that you need to be mindful 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.