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Shareholders might have noticed that The Swatch Group AG (VTX:UHR) filed its annual result this time last week. The early response was not positive, with shares down 8.5% to CHF196 in the past week. Revenues were in line with forecasts, at CHF7.9b, although statutory earnings per share came in 11% below what the analysts expected, at CHF16.75 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Swatch Group
Following last week's earnings report, Swatch Group's 19 analysts are forecasting 2024 revenues to be CHF7.98b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be CHF16.89, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of CHF8.16b and earnings per share (EPS) of CHF19.12 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a substantial drop in earnings per share numbers.
The consensus price target fell 7.8% to CHF247, with the weaker earnings outlook clearly leading valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Swatch Group analyst has a price target of CHF368 per share, while the most pessimistic values it at CHF202. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. From these estimates it looks as though the analysts expect the years of declining revenue to come to an end, given the flat forecast out to 2024. That would be a definite improvement, given that the past five years have seen revenue shrink 0.5% annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 6.8% per year. So it's pretty clear that, although revenues are improving, Swatch Group is still expected to grow slower than the industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Swatch Group. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Swatch Group's future valuation.