Yahoo Finance What Does The Future Hold For Lendlease Group (ASX:LLC)? These Analysts Have Been Cutting Their Estimates
The latest analyst coverage could presage a bad day for Lendlease Group (ASX:LLC), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
After the downgrade, the consensus from Lendlease Group's eight analysts is for revenues of AU$11b in 2021, which would reflect a noticeable 3.3% decline in sales compared to the last year of performance. The losses are expected to disappear over the next year or so, with forecasts for a profit of AU$0.66 per share this year. Previously, the analysts had been modelling revenues of AU$13b and earnings per share (EPS) of AU$0.67 in 2021. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a measurable cut to revenues and reconfirming their earnings per share estimates.
Check out our latest analysis for Lendlease Group
The consensus has reconfirmed its price target of AU$13.82, showing that the analysts don't expect weaker sales expectationsthis year to have a material impact on Lendlease Group's market value. 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. There are some variant perceptions on Lendlease Group, with the most bullish analyst valuing it at AU$16.74 and the most bearish at AU$11.75 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One more thing stood out to us about these estimates, and it's the idea that Lendlease Group'sdecline is expected to accelerate, with revenues forecast to fall 3.3% next year, topping off a historical decline of 0.5% a year 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 revenue grow 11% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Lendlease Group to suffer worse than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Lendlease Group's revenues are expected to grow slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Lendlease Group after today.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Lendlease Group going out to 2025, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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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