One thing we could say about the analysts on Materialise NV (NASDAQ:MTLS) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. At €20.46, shares are up 9.1% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
Following the downgrade, the consensus from four analysts covering Materialise is for revenues of €181m in 2020, implying a perceptible 7.6% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of €203m in 2020. It looks like forecasts have become a fair bit less optimistic on Materialise, given the measurable cut to revenue estimates.
We'd point out that there was no major changes to their price target of €14.92, suggesting the latest estimates were not enough to shift their view on the value of the business. 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. There are some variant perceptions on Materialise, with the most bullish analyst valuing it at €17.14 and the most bearish at €13.25 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Materialise's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 7.6% revenue decline a notable change from historical growth of 18% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 11% next year. It's pretty clear that Materialise's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Materialise this 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 Materialise after today.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Materialise's business, like dilutive stock issuance over the past year. Learn more, and discover the 2 other flags we've identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.