Yahoo Finance US$16.60: That's What Analysts Think CommScope Holding Company, Inc. Is Worth After Its Latest Results
It's been a mediocre week for CommScope Holding Company, Inc. (NASDAQ:COMM) shareholders, with the stock dropping 13% to US$12.62 in the week since its latest full-year results. It looks like the results were pretty good overall. While revenues of US$8.3b were in line with analyst predictions, statutory losses were much smaller than expected, with CommScope Holding Company losing US$5.02 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for CommScope Holding Company
Taking into account the latest results, the latest consensus from CommScope Holding Company's twelve analysts is for revenues of US$9.19b in 2020, which would reflect a notable 10% improvement in sales compared to the last 12 months. Statutory losses are forecast to balloon 68% to US$1.61 per share. Before this earnings announcement, analysts had been forecasting revenues of US$9.30b and losses of US$0.34 per share in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
With the increase in forecast losses for next year, it's perhaps no surprise to see that the average analyst price target dipped 6.4% to US$16.60, with analysts signalling that growing losses would be a definite concern. 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 CommScope Holding Company analyst has a price target of US$22.00 per share, while the most pessimistic values it at US$10.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. Next year brings more of the same, according to analysts, with revenue forecast to grow 10%, in line with its 12% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 3.4% per year. So it's pretty clear that CommScope Holding Company is forecast to grow substantially faster than its market.
The Bottom Line
The most obvious conclusion is that analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of CommScope Holding Company's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on CommScope Holding Company. Long-term earnings power is much more important than next year's profits. We have forecasts for CommScope Holding Company going out to 2022, and you can see them free on our platform here.
You can also see whether CommScope Holding Company is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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