The analysts covering Haydale Graphene Industries plc (LON:HAYD) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Investors however, have been notably more optimistic about Haydale Graphene Industries recently, with the stock price up an astounding 38% to UK£0.017 in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.
Following the downgrade, the latest consensus from Haydale Graphene Industries' two analysts is for revenues of UK£4.4m in 2020, which would reflect a huge 37% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£5.0m in 2020. The consensus view seems to have become more pessimistic on Haydale Graphene Industries, noting the measurable cut to revenue estimates in this update.
The consensus price target rose 7.1% to UK£0.03, with the analysts clearly more optimistic about Haydale Graphene Industries' prospects following this update.
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. The analysts are definitely expecting Haydale Graphene Industries'growth to accelerate, with the forecast 37% growth ranking favourably alongside historical growth of 24% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.4% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Haydale Graphene Industries to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. They're also forecasting more rapid revenue growth than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of Haydale Graphene Industries.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Haydale Graphene Industries' financials, such as major dilution from new stock issuance in the past year. For more information, you can click here to discover this and the 3 other concerns we've identified.
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