Danaos Corporation (NYSE:DAC) Analysts Are Pretty Bullish On The Stock After Recent Results

Last week, you might have seen that Danaos Corporation (NYSE:DAC) released its full-year result to the market. The early response was not positive, with shares down 2.7% to US$72.04 in the past week. Results were roughly in line with estimates, with revenues of US$974m and statutory earnings per share of US$28.95. The analysts 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Danaos

Taking into account the latest results, the current consensus from Danaos' three analysts is for revenues of US$1.01b in 2024. This would reflect a credible 3.6% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to increase 2.8% to US$30.46. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$983.6m and earnings per share (EPS) of US$28.90 in 2024. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 5.4% to US$78.67per share. 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 Danaos at US$90.00 per share, while the most bearish prices it at US$67.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Danaos' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.6% growth on an annualised basis. This is compared to a historical growth rate of 21% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 0.4% per year. Even after the forecast slowdown in growth, it seems obvious that Danaos is also expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Danaos' earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Danaos. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Danaos analysts - going out to 2025, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Danaos (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

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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.