Shorn Like A Sheep: Analysts Just Shaved Their CTS Eventim AG & Co. KGaA (ETR:EVD) Forecasts Dramatically
The analysts covering CTS Eventim AG & Co. KGaA (ETR:EVD) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Investors however, have been notably more optimistic about CTS Eventim KGaA recently, with the stock price up an incredible 35% to €40.50 in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.
Following the downgrade, the consensus from four analysts covering CTS Eventim KGaA is for revenues of €868m in 2020, implying a concerning 40% decline in sales compared to the last 12 months. Statutory earnings per share are supposed to dive 48% to €0.72 in the same period. Before this latest update, the analysts had been forecasting revenues of €1.4b and earnings per share (EPS) of €1.54 in 2020. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a pretty serious decline to earnings per share numbers as well.
Check out our latest analysis for CTS Eventim KGaA
The consensus price target fell 21% to €40.50, with the weaker earnings outlook clearly leading analyst valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values CTS Eventim KGaA at €47.00 per share, while the most bearish prices it at €30.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 40%, a significant reduction from annual growth of 15% 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 7.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - CTS Eventim KGaA is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of CTS Eventim KGaA.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple CTS Eventim KGaA analysts - going out to 2024, and you can see them 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.
