Time To Worry? Analysts Are Downgrading Their CMC Markets plc (LON:CMCX) Outlook
Today is shaping up negative for CMC Markets plc (LON:CMCX) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
Following the latest downgrade, the four analysts covering CMC Markets provided consensus estimates of UK£267m revenue in 2024, which would reflect a measurable 6.8% decline on its sales over the past 12 months. Statutory earnings per share are supposed to plunge 60% to UK£0.06 in the same period. Previously, the analysts had been modelling revenues of UK£338m and earnings per share (EPS) of UK£0.15 in 2024. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a large cut to earnings per share numbers as well.
View our latest analysis for CMC Markets
It'll come as no surprise then, to learn that the analysts have cut their price target 21% to UK£1.52.
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 annualised revenue decline of 6.8% by the end of 2024. This indicates a significant reduction from annual growth of 14% 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 0.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - CMC Markets 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 CMC Markets. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of CMC Markets.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with CMC Markets' business, like its declining profit margins. Learn more, and discover the 2 other flags we've identified, for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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.
