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One Forecaster Is Much More Bearish On Efecte Oy (HEL:EFECTE) Than They Used To Be

Market forces rained on the parade of Efecte Oy (HEL:EFECTE) shareholders today, when the covering analyst downgraded their forecasts for this year. 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 most recent consensus for Efecte Oy from its one analyst is for revenues of €14m in 2020 which, if met, would be a reasonable 4.1% increase on its sales over the past 12 months. Prior to the latest estimates, the analyst was forecasting revenues of €16m in 2020. It looks like forecasts have become a fair bit less optimistic on Efecte Oy, given the substantial drop in revenue estimates.

Check out our latest analysis for Efecte Oy

HLSE:EFECTE Past and Future Earnings March 31st 2020
HLSE:EFECTE Past and Future Earnings March 31st 2020

Notably, the analyst has cut their price target 8.7% to €4.75, suggesting concerns around Efecte Oy's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Efecte Oy's past performance and to peers in the same industry. We would highlight that Efecte Oy's revenue growth is expected to slow, with forecast 4.1% increase next year well below the historical 16% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Efecte Oy.

The Bottom Line

The clear low-light was that the analyst slashing their revenue forecasts for Efecte Oy this year. They're also anticipating slower revenue growth 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 Efecte Oy'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 Efecte Oy after today.

Want more information? One Efecte Oy broker/analyst 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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