Bearish: Analysts Just Cut Their Anaergia Inc. (TSE:ANRG) Revenue and EPS estimates
The latest analyst coverage could presage a bad day for Anaergia Inc. (TSE:ANRG), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the downgrade, the current consensus from Anaergia's eight analysts is for revenues of CA$183m in 2023 which - if met - would reflect a notable 12% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 31% to CA$0.53. Yet before this consensus update, the analysts had been forecasting revenues of CA$266m and losses of CA$0.47 per share in 2023. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
View our latest analysis for Anaergia
The consensus price target fell 20% to CA$3.79, implicitly signalling that lower earnings per share are a leading indicator for Anaergia's valuation. 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. The most optimistic Anaergia analyst has a price target of CA$8.00 per share, while the most pessimistic values it at CA$1.00. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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 highlight that Anaergia's revenue growth is expected to slow, with the forecast 16% annualised growth rate until the end of 2023 being well below the historical 22% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 8.7% per year. Even after the forecast slowdown in growth, it seems obvious that Anaergia is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Anaergia. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
That said, the analysts might have good reason to be negative on Anaergia, given a short cash runway. Learn more, and discover the 2 other concerns 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.
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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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