Analysts covering Jet2 plc (LON: JET2) delivered a dose of negativity to shareholders today, by substantially revising their statutory forecasts for this year. Income estimates have been slashed sharply as analysts have signaled a weaker outlook – perhaps a sign that investors should temper their expectations as well. The share price rose 6.7% to £ 11.48 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
After the downgrade, the latest consensus of the five Jet2 analysts is for revenue of £ 1.4bn in 2022, which would reflect a sizable 245% improvement in sales from the past 12 months. Prior to the latest estimates, analysts were forecasting revenues of £ 1.6bn in 2022. It looks like the forecast has become a little less bullish on Jet2, given the substantial drop in revenue estimates.
See our latest review for Jet2
One way to get more context on these forecasts is to look at how they stack up against both past performance and the performance of other companies in the same industry. It is clear from the latest estimates that Jet2’s growth rate is expected to accelerate significantly, with an annualized revenue growth forecast of 245% through the end of 2022 to be significantly faster than its historic growth of 5.7. % per year over the past five years. Compare that with other companies in the same industry, which are expected to increase their revenues by 33% per year. Given the expected acceleration in revenue, it’s pretty clear that Jet2 is expected to grow much faster than its industry.
The bottom line
The clear weak point was that analysts lowered their revenue forecast for Jet2 this year. They also forecast faster revenue growth than the overall market. Often a downgrade can trigger a chain of reductions, especially if an industry is in decline. So we wouldn’t be surprised if the market got much more cautious on Jet2 after today.
So things are definitely not looking good, and you should also be aware that we’ve spotted some potential warning signs with Jet2, including some recent substantial insider sales. For more information, you can click here to discover this flag and the 3 other flags that we have identified.
Another way to find interesting companies that might be reach an inflection point is to track whether management buys or sells, with our free list of growing companies that insiders buy.
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