Earnings Release: Here's Why Analysts Cut Their Star Equity Holdings, Inc. (NASDAQ:STRR) Price Target To US$5.75

Investors in Star Equity Holdings, Inc. (NASDAQ:STRR) had a good week, as its shares rose 5.2% to close at US$1.21 following the release of its annual results. It was a pretty bad result overall; while revenues were in line with expectations at US$107m, statutory losses exploded to US$0.96 per share. The analyst 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 estimate suggests is in store for next year.

See our latest analysis for Star Equity Holdings

Taking into account the latest results, the current consensus from Star Equity Holdings' sole analyst is for revenues of US$112.8m in 2022, which would reflect a satisfactory 5.9% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 94% to US$0.04. Before this earnings announcement, the analyst had been modelling revenues of US$112.8m and losses of US$0.04 per share in 2022.

As a result, it's unexpected to see that the consensus price target fell 13% to US$5.75, with the analyst seemingly becoming more concerned about ongoing losses, despite making no major changes to their forecasts.

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 Star Equity Holdings is forecast to grow faster in the future than it has in the past, with revenues expected to display 5.9% annualised growth until the end of 2022. If achieved, this would be a much better result than the 8.3% 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 7.5% annually for the foreseeable future. So although Star Equity Holdings' revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The most important thing to take away is that the analyst reconfirmed their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target fell measurably, with the analyst seemingly not reassured by the latest results, leading to a lower estimate of Star Equity Holdings' future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.

We don't want to rain on the parade too much, but we did also find 4 warning signs for Star Equity Holdings (1 is significant!) 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.