Stock Analysis

The Consensus EPS Estimates For Studio City International Holdings Limited (NYSE:MSC) Just Fell A Lot

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The analyst covering Studio City International Holdings Limited (NYSE:MSC) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.

Following the downgrade, the most recent consensus for Studio City International Holdings from its solitary analyst is for revenues of US$242m in 2021 which, if met, would be a huge 392% increase on its sales over the past 12 months. Losses are presumed to reduce, shrinking 15% from last year to US$3.73. Yet before this consensus update, the analyst had been forecasting revenues of US$331m and losses of US$3.14 per share in 2021. Ergo, there's been a clear change in sentiment, with the analyst administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out our latest analysis for Studio City International Holdings

NYSE:MSC Earnings and Revenue Growth April 24th 2021

The consensus price target was broadly unchanged at US$9.30, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that Studio City International Holdings is forecast to grow faster in the future than it has in the past, with revenues expected to display 4x annualised growth until the end of 2021. If achieved, this would be a much better result than the 0.2% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 22% annually. So it looks like Studio City International Holdings is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that the analyst increased their loss per share estimates for this year. While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Studio City International Holdings after the downgrade.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Studio City International Holdings going out as far as 2023, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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What are the risks and opportunities for Studio City International Holdings?

Studio City International Holdings Limited operates a gaming, retail, and entertainment resort in Cotai, Macau.

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  • Revenue is forecast to grow 110.48% per year


  • Highly volatile share price over the past 3 months

  • Shareholders have been substantially diluted in the past year

  • Currently unprofitable and not forecast to become profitable over the next 3 years

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