The analysts might have been a bit too bullish on First Resources Limited (SGX:EB5), given that the company fell short of expectations when it released its annual results last week. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$981m, statutory earnings missed forecasts by 14%, coming in at just US$0.093 per share. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, First Resources' eight analysts are now forecasting revenues of US$1.05b in 2024. This would be a reasonable 7.1% improvement in revenue compared to the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$1.10b and earnings per share (EPS) of US$0.13 in 2024. Overall, while there's been a small dip in revenue estimates, the consensus now no longer provides an EPS estimate. This implies that the market believes revenue is more important following the latest results.
There's been no real change to the consensus price target of S$1.62, with First Resources seemingly executing in line with expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values First Resources at S$2.11 per share, while the most bearish prices it at S$1.37. 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.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that First Resources' revenue growth is expected to slow, with the forecast 7.1% annualised growth rate until the end of 2024 being well below the historical 16% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.1% annually. Even after the forecast slowdown in growth, it seems obvious that First Resources is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their revenue estimates for next year. They also downgraded First Resources' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target held steady at S$1.62, with the latest estimates not enough to have an impact on their price targets.
At least one of First Resources' eight analysts has provided estimates out to 2026, which can be seen for free on our platform here.
Before you take the next step you should know about the 2 warning signs for First Resources 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.