Earnings Release: Here's Why Analysts Cut Their Eutelsat Communications S.A. (EPA:ETL) Price Target To €1.88
Shareholders of Eutelsat Communications S.A. (EPA:ETL) will be pleased this week, given that the stock price is up 19% to €2.03 following its latest annual results. Revenues of €1.2b beat expectations by a respectable 3.0%, although statutory losses per share increased. Eutelsat Communications lost €0.52, which was 67% more than what the analysts had included in their models. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the twelve analysts covering Eutelsat Communications are now predicting revenues of €1.26b in 2027. If met, this would reflect a modest 2.1% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 49% to €0.20. Before this latest report, the consensus had been expecting revenues of €1.26b and €0.18 per share in losses. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although revenue forecasts held steady, the consensus also made a modest increase to its losses per share forecasts.
See our latest analysis for Eutelsat Communications
The consensus price target fell 17% to €1.88per share, with the analysts clearly concerned by ballooning losses. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Eutelsat Communications analyst has a price target of €2.40 per share, while the most pessimistic values it at €0.30. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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 clear from the latest estimates that Eutelsat Communications' rate of growth is expected to accelerate meaningfully, with the forecast 2.1% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 1.3% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 2.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Eutelsat Communications is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Eutelsat Communications. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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 Eutelsat Communications' future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Eutelsat Communications. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Eutelsat Communications going out to 2029, and you can see them free on our platform here..
It is also worth noting that we have found 2 warning signs for Eutelsat Communications that you need to take into consideration.
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