Analysts Just Shaved Their trivago N.V. (NASDAQ:TRVG) Forecasts Dramatically

The analysts covering trivago N.V. (NASDAQ:TRVG) 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 analysts seeing grey clouds on the horizon. Surprisingly the share price has been buoyant, rising 11% to US$2.67 in the past 7 days. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

Following the downgrade, the latest consensus from trivago's nine analysts is for revenues of €310m in 2021, which would reflect a huge 24% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 96% to €0.029. Yet before this consensus update, the analysts had been forecasting revenues of €404m and losses of €0.011 per share in 2021. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for trivago

Analysts lifted their price target 21% to €1.90, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value. 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 trivago at €2.70 per share, while the most bearish prices it at €1.29. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the trivago's past performance and to peers in the same industry. For example, we noticed that trivago's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 24%, well above its historical decline of 3.0% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 15% next year. So it looks like trivago 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 analysts increased their loss per share estimates for this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of trivago.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for trivago going out to 2025, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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