Downgrade: Here's How Analysts See Kin and Carta plc (LON:KCT) Performing In The Near Term
Today is shaping up negative for Kin and Carta plc (LON:KCT) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
Following the latest downgrade, Kin and Carta's three analysts currently expect revenues in 2020 to be UK£150m, approximately in line with the last 12 months. Losses are presumed to reduce, shrinking 17% from last year to UK£0.015. Before this latest update, the analysts had been forecasting revenues of UK£169m and earnings per share (EPS) of UK£0.029 in 2020. So we can see that the consensus has become notably more bearish on Kin and Carta's outlook with these numbers, making a substantial drop in this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.
View our latest analysis for Kin and Carta
The consensus price target fell 30% to UK£1.07, implicitly signalling that lower earnings per share are a leading indicator for Kin and Carta's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Kin and Carta at UK£1.30 per share, while the most bearish prices it at UK£0.75. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One thing that stands out from these estimates is that shrinking revenues are expected to moderate from the historical decline of 25% per annum over the past five years.
The Bottom Line
The most important thing to take away is that analysts are expecting Kin and Carta to become unprofitable this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Kin and Carta.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Kin and Carta going out to 2022, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.
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