Last week, you might have seen that Alexandria Real Estate Equities, Inc. (NYSE:ARE) released its quarterly result to the market. The early response was not positive, with shares down 5.0% to US$152 in the past week. Revenues of US$545m smashed analyst forecasts, although statutory earnings came up 29% short, at US$0.63 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Alexandria Real Estate Equities after the latest results.
After the latest results, the seven analysts covering Alexandria Real Estate Equities are now predicting revenues of US$1.96b in 2021. If met, this would reflect a credible 6.2% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to plunge 33% to US$2.91 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.97b and earnings per share (EPS) of US$2.69 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at US$184, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Alexandria Real Estate Equities analyst has a price target of US$204 per share, while the most pessimistic values it at US$165. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
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. It's pretty clear that there is an expectation that Alexandria Real Estate Equities' revenue growth will slow down substantially, with revenues next year expected to grow 6.2%, compared to a historical growth rate of 16% over the past five years. Compare this to the 185 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 6.0% per year. So it's pretty clear that, while Alexandria Real Estate Equities' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Alexandria Real Estate Equities following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Alexandria Real Estate Equities going out to 2024, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with Alexandria Real Estate Equities (at least 2 which shouldn't be ignored) , and understanding these should be part of your investment process.
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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