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Downgrade: What You Need To Know About The Latest BTB Real Estate Investment Trust (TSE:BTB.UN) Forecasts

Simply Wall St

The analyst covering BTB Real Estate Investment Trust (TSE:BTB.UN) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. At CA$3.30, shares are up 6.5% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the latest downgrade, the solitary analyst covering BTB Real Estate Investment Trust provided consensus estimates of CA$91m revenue in 2020, which would reflect a small 4.8% decline on its sales over the past 12 months. Before the latest update, the analyst was foreseeing CA$103m of revenue in 2020. The consensus view seems to have become more pessimistic on BTB Real Estate Investment Trust, noting the substantial drop in revenue estimates in this update.

See our latest analysis for BTB Real Estate Investment Trust

TSX:BTB.UN Past and Future Earnings May 23rd 2020

Notably, the analyst has cut their price target 20% to CA$3.42, suggesting concerns around BTB Real Estate Investment Trust's 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. There are some variant perceptions on BTB Real Estate Investment Trust, with the most bullish analyst valuing it at CA$4.00 and the most bearish at CA$3.00 per share. Still, with such a tight range of estimates, it suggests the analyst has a pretty good idea of what they think the company is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 4.8%, a significant reduction from annual growth of 6.4% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.7% annually for the foreseeable future. It's pretty clear that BTB Real Estate Investment Trust's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The clear low-light was that the analyst slashing their revenue forecasts for BTB Real Estate Investment Trust this year. They also expect company revenue to perform worse than the wider market. The consensus price target fell measurably, with the analyst seemingly not reassured by recent business developments, leading to a lower estimate of BTB Real Estate Investment Trust's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on BTB Real Estate Investment Trust 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 BTB Real Estate Investment Trust's business, like dilutive stock issuance over the past year. Learn more, and discover the 4 other warning signs 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. 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. Thank you for reading.