Analysts Just Made A Major Revision To Their Macquarie Infrastructure Corporation (NYSE:MIC) Revenue Forecasts
One thing we could say about the analysts on Macquarie Infrastructure Corporation (NYSE:MIC) – they aren’t optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Surprisingly the share price has been buoyant, rising 13% to US$30.23 in the past 7 days. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.
Following the downgrade, the consensus from dual analysts covering Macquarie Infrastructure is for revenues of US$1.3b in 2021, implying a definite 11% decline in sales compared to the last 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$1.17 in per-share earnings. Previously, the analysts had been modelling revenues of US$1.6b and earnings per share (EPS) of US$0.92 in 2021. Thus, there’s been a definite swing in sentiment, with the analysts making a considerable reduction to next year’s revenue estimates, while at the same time substantially upgrading EPS. It’s almost as though the business is forecast to reduce its focus on growth to enhance profitability.
See our latest analysis for Macquarie Infrastructure
The consensus has made no major changes to the price target of US$34.50, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. There are some variant perceptions on Macquarie Infrastructure, with the most bullish analyst valuing it at US$35.00 and the most bearish at US$34.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Macquarie Infrastructure is an easy business to forecast or the underlying assumptions are obvious.
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. Over the past five years, revenues have declined around 1.1% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 11% decline in revenue next year. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to grow 15% next year. So while a broad number of companies are forecast to grow, unfortunately Macquarie Infrastructure is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for next year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn’t be surprised if the market became a lot more cautious on Macquarie Infrastructure after today.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have analyst estimates for Macquarie Infrastructure going out as far as 2022, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
This article by Simply Wall St is general in nature. 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.
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