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Investors in Transat A.T. Inc. (TSE:TRZ) had a good week, as its shares rose 4.2% to close at CA$4.72 following the release of its second-quarter results. Revenues of CA$870m were in line with expectations, although statutory losses per share were CA$0.76, some 13% smaller than was 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Check out our latest analysis for Transat A.T
Taking into account the latest results, the current consensus from Transat A.T's five analysts is for revenues of CA$2.97b in 2023, which would reflect a meaningful 13% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 72% to CA$2.33. Before this latest report, the consensus had been expecting revenues of CA$2.96b and CA$2.44 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.
These new estimates led to the consensus price target rising 31% to CA$4.40, with lower forecast losses suggesting things could be looking up for Transat A.T. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Transat A.T at CA$6.00 per share, while the most bearish prices it at CA$3.50. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Transat A.T is forecast to grow faster in the future than it has in the past, with revenues expected to display 29% annualised growth until the end of 2023. If achieved, this would be a much better result than the 24% 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 8.6% per year. So it looks like Transat A.T is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.