Yahoo Finance These Analysts Just Made An Incredible Downgrade To Their Auckland International Airport Limited (NZSE:AIA) EPS Forecasts
The analysts covering Auckland International Airport Limited (NZSE:AIA) 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.
Following the downgrade, the consensus from seven analysts covering Auckland International Airport is for revenues of NZ$266m in 2021, implying an uncomfortable 15% decline in sales compared to the last 12 months. After this downgrade, the company is anticipated to report a loss of NZ$0.0043 in 2021, a sharp decline from a profit over the last year. Yet prior to the latest estimates, the analysts had been forecasting revenues of NZ$296m and losses of NZ$0.0026 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
Check out our latest analysis for Auckland International Airport
There was no major change to the consensus price target of NZ$7.06, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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. Currently, the most bullish analyst values Auckland International Airport at NZ$7.61 per share, while the most bearish prices it at NZ$6.50. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One more thing stood out to us about these estimates, and it's the idea that Auckland International Airport's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 27% to the end of 2021. This tops off a historical decline of 0.4% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 11% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Auckland International Airport to suffer worse than the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Auckland International Airport. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Auckland International Airport after the downgrade.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Auckland International Airport going out to 2025, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
This article by Simply Wall St is general in nature. 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.
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