It's shaping up to be a tough period for Hyatt Hotels Corporation (NYSE:H), which a week ago released some disappointing full-year results that could have a notable impact on how the market views the stock. Earnings missed the mark badly, with revenues of US$1.3b falling 40% short of expectations. Losses correspondingly increased, with a US$6.94 per-share statutory loss some 17% larger than what the analysts expected. 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.
Taking into account the latest results, the consensus forecast from Hyatt Hotels' eleven analysts is for revenues of US$2.74b in 2021, which would reflect a sizeable 116% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$2.70 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$3.31b and losses of US$2.59 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.
The analysts lifted their price target 7.9% to US$68.44, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value. 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 Hyatt Hotels analyst has a price target of US$83.00 per share, while the most pessimistic values it at US$45.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. One thing stands out from these estimates, which is that Hyatt Hotels is forecast to grow faster in the future than it has in the past, with revenues expected to grow 116%. If achieved, this would be a much better result than the 5.6% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 24% per year. So it looks like Hyatt Hotels is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that Hyatt Hotels' revenues are expected 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Hyatt Hotels going out to 2023, and you can see them free on our platform here.
Even so, be aware that Hyatt Hotels is showing 2 warning signs in our investment analysis , and 1 of those is significant...
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