Despegar.com, Corp. (NYSE:DESP) Just Reported And Analysts Have Been Lifting Their Price Targets

By
Simply Wall St
Published
May 20, 2021
NYSE:DESP
Source: Shutterstock

Despegar.com, Corp. (NYSE:DESP) came out with its quarterly 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 US$52m beat expectations by a respectable 6.7%, although statutory losses per share increased. Despegar.com lost US$0.54, which was 83% 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Despegar.com after the latest results.

View our latest analysis for Despegar.com

earnings-and-revenue-growth
NYSE:DESP Earnings and Revenue Growth May 21st 2021

Following the latest results, Despegar.com's five analysts are now forecasting revenues of US$323.5m in 2021. This would be a huge 202% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 75% to US$0.67. Before this earnings announcement, the analysts had been modelling revenues of US$325.0m and losses of US$0.67 per share in 2021.

The average price target fell 6.6% to US$16.27, with the ongoing losses seemingly a concern for the analysts, despite the lack of real change to the earnings forecasts. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Despegar.com, with the most bullish analyst valuing it at US$23.00 and the most bearish at US$13.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Despegar.com is forecast to grow faster in the future than it has in the past, with revenues expected to display 3x annualised growth until the end of 2021. If achieved, this would be a much better result than the 35% annual decline over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 22% per year. Not only are Despegar.com's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Despegar.com going out to 2023, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Despegar.com you should know about.

If you decide to trade Despegar.com, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted


Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.