Celebrations may be in order for Hostelworld Group plc (LON:HSW) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that Hostelworld Group will make substantially more sales than they'd previously expected.
Following the upgrade, the most recent consensus for Hostelworld Group from its four analysts is for revenues of €54m in 2022 which, if met, would be a major 221% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing €49m of revenue in 2022. The consensus has definitely become more optimistic, showing a substantial gain in revenue forecasts.
There was no particular change to the consensus price target of €1.78, with Hostelworld Group's latest outlook seemingly not enough to result in a change of valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Hostelworld Group at €2.14 per share, while the most bearish prices it at €1.09. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Hostelworld Group shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Hostelworld Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 221% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 28% a year 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 14% per year. So it looks like Hostelworld Group is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for Hostelworld Group this year. The analysts also expect revenues to grow faster than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Hostelworld Group.
Analysts are clearly in love with Hostelworld Group at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as recent substantial insider selling. You can learn more, and discover the 2 other flags we've identified, for 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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.