Analysts Have Just Cut Their Picanol nv (EBR:PIC) Revenue Estimates By 14%
Today is shaping up negative for Picanol nv (EBR:PIC) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. 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 Picanol's two analysts is for revenues of €2.1b in 2020, which would reflect a perceptible 7.3% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing €2.4b of revenue in 2020. The consensus view seems to have become more pessimistic on Picanol, noting the substantial drop in revenue estimates in this update.
Check out our latest analysis for Picanol
There was no particular change to the consensus price target of €70.40, with Picanol's latest outlook seemingly not enough to result in a change of valuation. 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. Currently, the most bullish analyst values Picanol at €78.80 per share, while the most bearish prices it at €62.00. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 7.3%, a significant reduction from annual growth of 29% 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 4.4% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Picanol is expected to lag the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Picanol this year. They also expect company revenue to perform worse than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Picanol going forwards.
Unfortunately, by using these new estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Picanol that suggests the company could be somewhat overvalued. Find out why, and see how we estimate the valuation 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.
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