One thing we could say about the analysts on Galaxy Limited Entertainment Group (HKG:27) – they are not optimistic, having just made a major negative revision of their (statutory) short-term forecast for the organization. Both revenue and earnings per share (EPS) forecasts have been revised down as analysts see gray clouds on the horizon.
After the downgrade, the 16 analysts covering Galaxy Entertainment Group now forecast revenue of HK$23 billion in 2022. If achieved, it would reflect a notable 16% improvement in sales over the past 12 months. Earnings per share are expected to rebound 69% to HK$0.51. Prior to this latest update, analysts were forecasting revenue of HK$25 billion and earnings per share (EPS) of HK$0.76 in 2022. Forecasts appear less optimistic after the new consensus figures, with estimates lower sales and a sharp reduction in profits. forecast per share.
Check out our latest analysis for Galaxy Entertainment Group
Analysts made no major changes to their price target of HK$53.32, suggesting that the downward revisions should not have a long-term impact on Galaxy Entertainment Group’s valuation. It might also be instructive to look at the range of analysts’ estimates, to gauge how different the outlier opinions are from the mean. There are variant perceptions on Galaxy Entertainment Group, with the most bullish analyst pricing it at HK$60.00 and the most bearish at HK$47.00 per share. Even so, with a relatively close group of estimates, it seems analysts are quite confident in their assessments, suggesting that Galaxy Entertainment Group is an easy-to-predict business or that the underlying assumptions are obvious.
One way to get more context on these forecasts is to examine how they compare both to past performance and to the performance of other companies in the same industry. For example, we noticed that Galaxy Entertainment Group’s growth rate is expected to accelerate significantly, with revenue expected to show 22% growth by the end of 2022 on an annualized basis. That’s well above its historic decline of 21% per year over the past five years. In contrast, our data suggests that other companies (with analyst coverage) in a similar industry should see revenue growth of 25% annually. So it looks like Galaxy Entertainment Group is set to grow at roughly the same rate as the industry at large.
The essential
The most important thing to remember is that analysts have cut their earnings per share estimates, expecting a sharp drop in trading conditions. Unfortunately, they have also lowered their sales forecast, but the business is still expected to grow at roughly the same rate as the market itself. We are also surprised to see that the price target remained unchanged. Still, deteriorating trading conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn’t blame investors for being more cautious of Galaxy Entertainment Group post-downgrade. .
Even so, the longer-term trajectory of the company is far more important to the creation of shareholder value. At Simply Wall St, we have a full range of analyst estimates for Galaxy Entertainment Group out to 2024, and you can view them for free on our platform here.
Of course, see the management of the company invest large sums of money in a stock can be just as useful as knowing if analysts are lowering their estimates. So you can also search this free list of stocks that insiders buy.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.