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News Flash: One Spirit Technology Solutions Ltd (ASX:ST1) Analyst Has Been Trimming Their Revenue Forecasts

·3 min read

Today is shaping up negative for Spirit Technology Solutions Ltd (ASX:ST1) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the consensus from one analyst covering Spirit Technology Solutions is for revenues of AU$124m in 2023, implying a not inconsiderable 10% decline in sales compared to the last 12 months. Prior to this update, the analyst had been forecasting revenues of AU$155m and earnings per share (EPS) of AU$0.005 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a earnings per share numbers as well.

Check out our latest analysis for Spirit Technology Solutions

earnings-and-revenue-growth
earnings-and-revenue-growth

Notably, the analyst has cut their price target 57% to AU$0.13, suggesting concerns around Spirit Technology Solutions' valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Spirit Technology Solutions' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 10% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 53% 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 4.6% annually for the foreseeable future. It's pretty clear that Spirit Technology Solutions' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Spirit Technology Solutions' revenues are expected to grow slower 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 Spirit Technology Solutions' future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Spirit Technology Solutions going forwards.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2025, which can be seen 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.

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.

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