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Today is shaping up negative for Marcus & Millichap, Inc. (NYSE:MMI) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.
After the downgrade, the consensus from Marcus & Millichap's twin analysts is for revenues of US$757m in 2020, which would reflect a noticeable 6.2% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to plunge 23% to US$1.50 in the same period. Previously, the analysts had been modelling revenues of US$851m and earnings per share (EPS) of US$2.05 in 2020. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.
It'll come as no surprise then, to learn that the analysts have cut their price target 41% to US$23.00.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Marcus & Millichap's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 6.2% revenue decline a notable change from historical growth of 5.6% 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 5.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Marcus & Millichap is expected to lag the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Marcus & Millichap. 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 Marcus & Millichap.
That said, the analysts might have good reason to be negative on Marcus & Millichap, given concerns around earnings quality. For more information, you can click here to discover this and the 1 other flag we've identified.
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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