Yahoo Finance Stagwell Inc. (NASDAQ:STGW) Just Reported And Analysts Have Been Lifting Their Price Targets
It's been a pretty great week for Stagwell Inc. (NASDAQ:STGW) shareholders, with its shares surging 13% to US$6.90 in the week since its latest first-quarter results. The business exceeded expectations with revenue of US$670m coming in 8.2% ahead of forecasts. Statutory losses were US$0.01 a share, in line with what the analysts predicted. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Stagwell
After the latest results, the six analysts covering Stagwell are now predicting revenues of US$2.77b in 2024. If met, this would reflect a reasonable 7.4% improvement in revenue compared to the last 12 months. Stagwell is also expected to turn profitable, with statutory earnings of US$0.33 per share. Before this earnings report, the analysts had been forecasting revenues of US$2.69b and earnings per share (EPS) of US$0.34 in 2024. There doesn't appear to have been a major change in sentiment following the results, other than the small increase to revenue estimates.
The consensus price target increased 16% to US$8.21, with an improved revenue forecast carrying the promise of a more valuable business, in time. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Stagwell, with the most bullish analyst valuing it at US$10.00 and the most bearish at US$7.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Stagwell shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Stagwell's past performance and to peers in the same industry. We would highlight that Stagwell's revenue growth is expected to slow, with the forecast 10% annualised growth rate until the end of 2024 being well below the historical 31% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.2% per year. So it's pretty clear that, while Stagwell's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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 Stagwell analysts - going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 1 warning sign for Stagwell that we have uncovered.
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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.
