Funding Circle Holdings plc (LON:FCH) Analysts Are More Bearish Than They Used To Be
The latest analyst coverage could presage a bad day for Funding Circle Holdings plc (LON:FCH), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. Bidders are definitely seeing a different story, with the stock price of UK£0.49 reflecting a 11% rise in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.
After this downgrade, Funding Circle Holdings' three analysts are now forecasting revenues of UK£172m in 2024. This would be a credible 2.4% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 43% to UK£0.062. Yet prior to the latest estimates, the analysts had been forecasting revenues of UK£188m and losses of UK£0.062 per share in 2024. There doesn't appear to have been a major change in analyst sentiment following this consensus update, with a cut to revenue and no change to loss per share estimates.
See our latest analysis for Funding Circle Holdings
There was no real change to the consensus price target of UK£1.25, suggesting that the revisions to revenue estimates are not expected to have a long-term impact on Funding Circle Holdings' valuation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Funding Circle Holdings' revenue growth is expected to slow, with the forecast 2.4% annualised growth rate until the end of 2024 being well below the historical 4.5% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 18% annually. Factoring in the forecast slowdown in growth, it seems obvious that Funding Circle Holdings is also expected to grow slower than other industry participants.
The Bottom Line
Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Funding Circle Holdings' revenues are expected to grow slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Funding Circle Holdings after the downgrade.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Funding Circle Holdings analysts - going out to 2026, 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
