Investors in Transat A.T. Inc. (TSE:TRZ) had a good week, as its shares rose 4.2% to close at CA$4.72 following the release of its second-quarter results. Revenues of CA$870m were in line with expectations, although statutory losses per share were CA$0.76, some 13% smaller than was expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Transat A.T  earnings-and-revenue-growth

Taking into account the latest results, the current consensus from Transat A.T's five analysts is for revenues of CA$2.97b in 2023, which would reflect a meaningful 13% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 72% to CA$2.33. Before this latest report, the consensus had been expecting revenues of CA$2.96b and CA$2.44 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.

These new estimates led to the consensus price target rising 31% to CA$4.40, with lower forecast losses suggesting things could be looking up for Transat A.T. 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 Transat A.T at CA$6.00 per share, while the most bearish prices it at CA$3.50. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Transat A.T is forecast to grow faster in the future than it has in the past, with revenues expected to display 29% annualised growth until the end of 2023. If achieved, this would be a much better result than the 24% annual decline 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 8.6% per year. So it looks like Transat A.T is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Transat A.T going out to 2025, and you can see them free on our platform here..

Even so, be aware that  Transat A.T is showing  1 warning sign in our investment analysis, you should know about...

Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here