Newsflash: Caesarstone Ltd. (NASDAQ:CSTE) Analysts Have Been Trimming Their Revenue Forecasts
The analysts covering Caesarstone Ltd. (NASDAQ:CSTE) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following this downgrade, Caesarstone's twin analysts are forecasting 2023 revenues to be US$694m, approximately in line with the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$776m in 2023. The consensus view seems to have become more pessimistic on Caesarstone, noting the measurable cut to revenue estimates in this update.
Check out our latest analysis for Caesarstone
Notably, the analysts have cut their price target 34% to US$9.50, suggesting concerns around Caesarstone'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 Caesarstone, with the most bullish analyst valuing it at US$10.00 and the most bearish at US$9.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Caesarstone is an easy business to forecast or the underlying assumptions are obvious.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Caesarstone's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 0.9% by the end of 2023. This indicates a significant reduction from annual growth of 2.4% 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 3.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Caesarstone is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for next year. They also expect company revenue to perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Caesarstone's future valuation. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Caesarstone after today.
Looking to learn more? At least one of Caesarstone's twin analysts has provided estimates out to 2023, 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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