Yahoo Finance Analysts Have Been Trimming Their Nielsen Holdings plc (NYSE:NLSN) Price Target After Its Latest Report
Investors in Nielsen Holdings plc (NYSE:NLSN) had a good week, as its shares rose 6.1% to close at US$13.96 following the release of its first-quarter results. It looks like the results were pretty good overall. While revenues of US$1.6b were in line with analyst predictions, statutory losses were much smaller than expected, with Nielsen Holdings losing US$0.05 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
View our latest analysis for Nielsen Holdings
After the latest results, the consensus from Nielsen Holdings' 13 analysts is for revenues of US$6.31b in 2020, which would reflect a small 2.8% decline in sales compared to the last year of performance. Losses are predicted to fall substantially, shrinking 100% to US$0.0061. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$6.53b and losses of US$0.43 per share in 2020. Although the revenue estimates have fallen somewhat, Nielsen Holdings'future looks a little different to the past, with a the loss per share forecasts in particular.
The consensus price target fell 9.3% to US$18.71, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Nielsen Holdings analyst has a price target of US$28.00 per share, while the most pessimistic values it at US$5.50. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Nielsen Holdings' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 2.8%, a significant reduction from annual growth of 1.2% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.7% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Nielsen Holdings is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. With that said, earnings are more important to the long-term value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Nielsen Holdings. 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 Nielsen Holdings going out to 2023, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 2 warning signs for Nielsen Holdings (of which 1 shouldn't be ignored!) you should know about.
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