It’s been a good week for Equinix, Inc. (REIT) (NASDAQ:EQIX) shareholders, because the company has just released its latest yearly results, and the shares gained 7.0% to US$649. Equinix (REIT) reported in line with analyst predictions, delivering revenues of US$5.6b and statutory earnings per share of US$5.99, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. We thought readers would find it interesting to see analysts’ latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the latest consensus from Equinix (REIT)’s 22 analysts is for revenues of US$6.04b in 2020, which would reflect a notable 8.7% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to shoot up 32% to US$7.97. In the lead-up to this report, analysts had been modelling revenues of US$6.05b and earnings per share (EPS) of US$7.83 in 2020. The consensus analysts don’t seem to have seen anything in these results that would have changed their view on the business, given there’s been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$649. The consensus price target just an average of individual analyst targets, so – considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Equinix (REIT) analyst has a price target of US$725 per share, while the most pessimistic values it at US$420. This shows there is still quite a bit of diversity in estimates, but analysts don’t appear to be totally split on the stock as though it might be a success or failure situation.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Equinix (REIT)’s performance in recent years. We would highlight that Equinix (REIT)’s revenue growth is expected to slow, with forecast 8.7% increase next year well below the historical 18%p.a. growth over the last five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.0% next year. So it’s pretty clear that, while Equinix (REIT)’s revenue growth is expected to slow, it’s still expected to grow faster than the market itself.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn’t be too quick to come to a conclusion on Equinix (REIT). Long-term earnings power is much more important than next year’s profits. We have forecasts for Equinix (REIT) going out to 2024, and you can see them free on our platform here.
You can also see whether Equinix (REIT) is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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