Earnings Miss: IHS Holding Limited Missed EPS And Analysts Are Revising Their Forecasts

Investors in IHS Holding Limited (NYSE:IHS) had a good week, as its shares rose 2.2% to close at US$10.50 following the release of its annual results. Things were not great overall, with a surprise (statutory) loss of US$0.09 per share on revenues of US$1.6b, even though the analysts had been expecting a profit. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for IHS Holding

Taking into account the latest results, the consensus forecast from IHS Holding's five analysts is for revenues of US$1.78b in 2022, which would reflect a solid 13% improvement in sales compared to the last 12 months. Earnings are expected to improve, with IHS Holding forecast to report a statutory profit of US$0.09 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.83b and earnings per share (EPS) of US$0.22 in 2022. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share numbers.

The consensus price target fell 9.6% to US$22.00, with the weaker earnings outlook clearly leading valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values IHS Holding at US$27.00 per share, while the most bearish prices it at US$20.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await IHS Holding shareholders.

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. The analysts are definitely expecting IHS Holding's growth to accelerate, with the forecast 13% annualised growth to the end of 2022 ranking favourably alongside historical growth of 10% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 0.8% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect IHS Holding to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of IHS Holding's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for IHS Holding going out to 2024, and you can see them free on our platform here..

Even so, be aware that IHS Holding is showing 1 warning sign in our investment analysis , you should know about...

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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.