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Spirit Airlines, Inc. (NYSE:SAVE) Just Reported And Analysts Have Been Cutting Their Estimates

editorial-team@simplywallst.com (Simply Wall St)
·3 min read

Last week, you might have seen that Spirit Airlines, Inc. (NYSE:SAVE) released its second-quarter result to the market. The early response was not positive, with shares down 6.8% to US$2.76 in the past week. Revenues were in line with expectations, at US$1.3b, while statutory losses ballooned to US$1.76 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Spirit Airlines

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the nine analysts covering Spirit Airlines provided consensus estimates of US$4.95b revenue in 2024, which would reflect a measurable 3.5% decline over the past 12 months. Losses are forecast to balloon 21% to US$7.49 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$5.22b and losses of US$5.48 per share in 2024. While this year's revenue estimates dropped there was also a very substantial increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The average price target was broadly unchanged at US$2.54, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Spirit Airlines analyst has a price target of US$3.00 per share, while the most pessimistic values it at US$2.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 6.9% annualised decline to the end of 2024. That is a notable change from historical growth of 15% 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 7.2% per year. It's pretty clear that Spirit Airlines' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Spirit Airlines. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$2.54, with the latest estimates not enough to have an impact on their price targets.

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 Spirit Airlines going out to 2026, 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 2 warning signs for Spirit Airlines that you need to be mindful of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com