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Analyst Estimates: Here’s What Brokers Think Of Grab Holdings Limited (NASDAQ:GRAB) After Its Third-Quarter Report

A week ago, Grab Holdings Limited (NASDAQ:GRAB) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Results overall were credible, with revenues arriving 9.7% better than analyst forecasts at US$382m. Higher revenues also resulted in lower statutory losses, which were US$0.08 per share, some 9.7% smaller than the analysts expected. 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. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Grab Holdings after the latest results.

Our analysis indicates that GRAB is potentially undervalued!

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NasdaqGS:GRAB Earnings and Revenue Growth November 18th 2022

Taking into account the latest results, the current consensus from Grab Holdings’ 20 analysts is for revenues of US$1.89b in 2023, which would reflect a sizeable 79% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 58% to US$0.25. Before this earnings announcement, the analysts had been modelling revenues of US$1.87b and losses of US$0.26 per share in 2023. 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 next year.

The average price target held steady at US$4.17, seeming to indicate that business is performing in line with expectations. 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. There are some variant perceptions on Grab Holdings, with the most bullish analyst valuing it at US$6.00 and the most bearish at US$2.58 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It’s pretty clear that there is an expectation that Grab Holdings’ revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 59% growth on an annualised basis. This is compared to a historical growth rate of 75% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.9% annually. Even after the forecast slowdown in growth, it seems obvious that Grab Holdings is also expected to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider 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 in mind, we wouldn’t be too quick to come to a conclusion on Grab Holdings. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Grab Holdings going out to 2024, and you can see them free on our platform here..

And what about risks? Every company has them, and we’ve spotted 2 warning signs for Grab Holdings (of which 1 is a bit concerning!) you should know about.

Valuation is complex, but we’re helping make it simple.

Find out whether Grab Holdings is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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.

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