Montrose Environmental Group, Inc. (NYSE:MEG) Analysts Are Pretty Bullish On The Stock After Recent Results

Shareholders of Montrose Environmental Group, Inc. (NYSE:MEG) will be pleased this week, given that the stock price is up 18% to US$38.02 following its latest yearly results. The statutory results were mixed overall, with revenues of US$624m in line with analyst forecasts, but losses of US$1.57 per share, some 4.7% larger than the analysts were predicting. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Montrose Environmental Group

Following the latest results, Montrose Environmental Group's six analysts are now forecasting revenues of US$690.6m in 2024. This would be a solid 11% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 44% to US$0.87. Before this earnings announcement, the analysts had been modelling revenues of US$669.7m and losses of US$0.84 per share in 2024. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although there was a nice uplift to revenue, the consensus also made a pronounced increase to its losses per share forecasts.

The average price target rose 10% to US$46.42, even thoughthe analysts have been updating their forecasts to show higher revenues and higher forecast losses. 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. The most optimistic Montrose Environmental Group analyst has a price target of US$54.00 per share, while the most pessimistic values it at US$33.50. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Montrose Environmental Group's past performance and to peers in the same industry. We would highlight that Montrose Environmental Group's revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2024 being well below the historical 22% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.3% per year. So it's pretty clear that, while Montrose Environmental Group's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Montrose Environmental Group. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Montrose Environmental Group analysts - going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Montrose Environmental Group that you need to take into consideration.

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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.