It's been a pretty great week for Prada S.p.A. (HKG:1913) shareholders, with its shares surging 14% to HK$63.90 in the week since its latest full-year results. Prada reported €4.7b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of €0.26 beat expectations, being 2.4% higher than what the analysts expected. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Prada after the latest results.
Taking into account the latest results, the current consensus from Prada's 17 analysts is for revenues of €5.09b in 2024. This would reflect a modest 7.8% increase on its revenue over the past 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of €5.02b and earnings per share (EPS) of €0.28 in 2024. Overall, while the analysts have reconfirmed their revenue estimates, the consensus now no longer provides an EPS estimate. This implies that the market believes revenue is more important after these latest results.
We'd also point out that thatthe analysts have made no major changes to their price target of HK$59.34. 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 Prada analyst has a price target of HK$70.04 per share, while the most pessimistic values it at HK$42.62. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
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. We would highlight that Prada's revenue growth is expected to slow, with the forecast 7.8% annualised growth rate until the end of 2024 being well below the historical 10% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 9.9% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Prada.
The Bottom Line
The clear take away from these updates is that the analysts made no change to their revenue estimates for next year, with the business apparently performing in line with their models. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
We have estimates for Prada from its 17 analysts out to 2026, and you can see them free on our platform here.
We also provide an overview of the Prada Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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