Wrong focus – E24

Wrong focus – E24

The Norwegian company’s boss recently urged analysts to take a second look at their numbers. Manager Thomas Nielsen thought the comment sounded sloppy.

Important: Thomas Nielsen, Portfolio Manager at First Fondene.
published: published:

Norwegian CEO Geir Carlsen addressed analysts in the quarterly presentation on Friday last week.

– Carlsen said I think you have to look at the numbers again.

Carlsen pointed to an analyst estimate of more than NOK 1.1 billion in profits for 2023. He thought it was very low, given the prospect of a strong summer and low fuel prices.

Thomas Nielsen, portfolio manager at First Fondene, responds to Carlsen’s remarks. He believes the statements are a red flag.

Nielsen points out that Carlsen is talking about analyst estimates. The manager believes that analysts lose ratings almost every time.

– This is the wrong focus, Nielsen tells E24.

– dirty

Jet fuel prices are public information, so analysts can monitor prices every day. Norwegian publishes monthly traffic reports in which the company provides information on fuel price protection.

– The price of fuel should not be a surprise to analysts. They should be able to calculate the integer numbers themselves, Nielsen says.

Nielsen believes, on principle, that CEOs shouldn’t spend time figuring out what analysts have in terms of estimates.

– they should not comment on it, but rather provide the best possible numbers at all times. Seems like a careless comment. I wouldn’t have liked it if a company I owned had said that, says Nielsen.

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The fund manager does not own Norwegian shares.

Nielsen says he doesn’t look at analytics.

The vast majority of predictions are wrong, so I try to stay away from them. You miss a lot. The flip is that it’s something you don’t have to spend a lot of time on. This does not mean that analysts cannot have good knowledge of the industries they cover. A company like Norwegian is very unstable, says Nielsen.

Previously, Nielsen worked as a stock analyst.

Norwegian does not have any comments on this issue.

RED FLAG: Thomas Nielsen, portfolio manager at First Fondene, posted a message on Twitter about this on Friday last week. The message consists of an emoji with a red tick pointing to an article about the remarks of the Norwegian president.

Jumping course

Norwegian stock price rose sharply in Oslo Bors. On Monday, the stock rose 11.92 percent to NOK 11.88.

The price hike comes after several analysts raised their price targets for the stock earlier in the day.

DNB Markets raises the target price on Norwegian to NOK 18 per share from NOK 16 and reiterates the buy recommendation. Pareto Securities raised its price target to NOK 20 from NOK 15, with a buy recommendation as well, according to Infront TDN Direkt.

“Results in the first quarter were slightly better than expected, and strong summer bookings combined with lower fuel prices paint a positive picture for 2023, despite the fact that the company revised expected available seat kilometers (ASK) and higher unit costs ( CASK), writes DNB Markets.

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Another manager, Eivind Veddeng at DNB, also commented on Karlsen’s analysts’ comments.

Feding believes Carlsen was “absolutely right” that analysts’ full-year earnings forecasts were too low, as there were too high estimates for fuel costs in analysts’ estimates.

Dalila Awolowo

Dalila Awolowo

"Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff."

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