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The latest analyst coverage could presage a bad day for Mack-Cali Realty Corporation (NYSE:CLI), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
After the downgrade, the consensus from Mack-Cali Realty's dual analysts is for revenues of US$295m in 2021, which would reflect a measurable 7.6% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing US$378m of revenue in 2021. The consensus view seems to have become more pessimistic on Mack-Cali Realty, noting the pretty serious reduction to revenue estimates in this update.
There was no particular change to the consensus price target of US$16.21, with Mack-Cali Realty's latest outlook seemingly not enough to result in a change of valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Mack-Cali Realty analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$13.00. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
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 also point out that the forecast 7.6% revenue decline is better than the historical trend, which saw revenues shrink 16% annually over the past five years
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Mack-Cali Realty next year. They're also anticipating slower revenue growth than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Mack-Cali Realty after today.
But wait - there's more! We have estimates for Mack-Cali Realty from its dual analysts out until 2024, and you can see them free on our platform here.
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This article by Simply Wall St is general in nature. 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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