Things Look Grim For Alfen N.V. (AMS:ALFEN) After Today's Downgrade
One thing we could say about the analysts on Alfen N.V. (AMS:ALFEN) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
Following the latest downgrade, the current consensus, from the dual analysts covering Alfen, is for revenues of €140m in 2020, which would reflect a perceptible 2.1% reduction in Alfen's sales over the past 12 months. Statutory earnings per share are supposed to tumble 66% to €0.095 in the same period. Prior to this update, the analysts had been forecasting revenues of €192m and earnings per share (EPS) of €0.53 in 2020. Indeed, we can see that the analysts are a lot more bearish about Alfen's prospects, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.
View our latest analysis for Alfen
The consensus price target fell 22% to €21.00, with the weaker earnings outlook clearly leading analyst valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Alfen analyst has a price target of €27.00 per share, while the most pessimistic values it at €12.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 2.1%, a significant reduction from annual growth of 29% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.8% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Alfen 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 Alfen. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Alfen's revenues are expected to grow 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 Alfen.
A high debt burden combined with a downgrade of this magnitude always gives us some reason for concern, especially if these forecasts are just the first sign of a business downturn. See why we're concerned about Alfen's balance sheet by visiting our risks dashboard for free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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