Results: Macquarie Technology Group Limited Exceeded Expectations And The Consensus Has Updated Its Estimates
Shareholders might have noticed that Macquarie Technology Group Limited (ASX:MAQ) filed its yearly result this time last week. The early response was not positive, with shares down 6.8% to AU$56.20 in the past week. Macquarie Technology Group reported AU$390m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of AU$1.25 beat expectations, being 5.4% higher than what the analysts 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Macquarie Technology Group's seven analysts is for revenues of AU$401.2m in 2027. This reflects a credible 2.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to plummet 38% to AU$0.77 in the same period. Before this earnings report, the analysts had been forecasting revenues of AU$410.7m and earnings per share (EPS) of AU$0.75 in 2027. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.
Check out our latest analysis for Macquarie Technology Group
There's been no real change to the average price target of AU$85.60, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Macquarie Technology Group at AU$110 per share, while the most bearish prices it at AU$57.90. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Macquarie Technology Group's revenue growth is expected to slow, with the forecast 2.9% annualised growth rate until the end of 2027 being well below the historical 6.0% 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 25% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Macquarie Technology Group.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Macquarie Technology Group's earnings potential next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Still, earnings per share are more important to value creation for shareholders. The consensus price target held steady at AU$85.60, 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 Macquarie Technology Group going out to 2029, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for Macquarie Technology Group you should know about.
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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.