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The analysts might have been a bit too bullish on Maxar Technologies Inc. (NYSE:MAXR), given that the company fell short of expectations when it released its quarterly results last week. It was a pretty negative result overall, with revenues of US$405m missing analyst predictions by 3.0%. Worse, the business reported a statutory loss of US$0.10 per share, much larger than the analysts had forecast prior to the result. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following last week's earnings report, Maxar Technologies' twelve analysts are forecasting 2022 revenues to be US$1.81b, approximately in line with the last 12 months. Statutory earnings per share are forecast to plummet 81% to US$0.32 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.83b and earnings per share (EPS) of US$0.42 in 2022. So there's definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$43.17, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. There are some variant perceptions on Maxar Technologies, with the most bullish analyst valuing it at US$52.00 and the most bearish at US$32.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Maxar Technologies' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 1.6% growth on an annualised basis. This is compared to a historical growth rate of 2.3% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.6% annually. Factoring in the forecast slowdown in growth, it seems obvious that Maxar Technologies is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$43.17, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Maxar Technologies analysts - going out to 2024, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 4 warning signs for Maxar Technologies (1 is concerning!) that you need to be mindful of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.