It's been a good week for The Interpublic Group of Companies, Inc. (NYSE:IPG) shareholders, because the company has just released its latest first-quarter results, and the shares gained 2.4% to US$31.47. Interpublic Group of Companies reported in line with analyst predictions, delivering revenues of US$2.2b and statutory earnings per share of US$2.85, suggesting the business is executing well and in line with its plan. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following last week's earnings report, Interpublic Group of Companies' nine analysts are forecasting 2024 revenues to be US$9.44b, approximately in line with the last 12 months. Statutory earnings per share are expected to shrink 8.1% to US$2.64 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$9.51b and earnings per share (EPS) of US$2.64 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$35.59, suggesting that the company has met expectations in its recent result. 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. Currently, the most bullish analyst values Interpublic Group of Companies at US$39.00 per share, while the most bearish prices it at US$31.00. This is a very narrow spread of estimates, implying either that Interpublic Group of Companies is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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 Interpublic Group of Companies' revenue growth is expected to slow, with the forecast 0.5% annualised growth rate until the end of 2024 being well below the historical 3.1% 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 3.2% per year. Factoring in the forecast slowdown in growth, it seems obvious that Interpublic Group of Companies is also expected to grow slower than other industry participants.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Interpublic Group of Companies' revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$35.59, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Interpublic Group of Companies going out to 2026, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for Interpublic Group of Companies you should be aware of.
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