Shorn Like A Sheep: Analysts Just Shaved Their COLTENE Holding AG (VTX:CLTN) Forecasts Dramatically

Today is shaping up negative for COLTENE Holding AG (VTX:CLTN) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the latest downgrade, the three analysts covering COLTENE Holding provided consensus estimates of CHF220m revenue in 2020, which would reflect a chunky 20% decline on its sales over the past 12 months. Statutory earnings per share are anticipated to decrease 2.7% to CHF3.26 in the same period. Previously, the analysts had been modelling revenues of CHF267m and earnings per share (EPS) of CHF4.26 in 2020. Indeed, we can see that the analysts are a lot more bearish about COLTENE Holding's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for COLTENE Holding

Analysts made no major changes to their price target of CHF78.00, suggesting the downgrades are not expected to have a long-term impact on COLTENE Holding'svaluation. 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 COLTENE Holding, with the most bullish analyst valuing it at CHF82.00 and the most bearish at CHF74.00 per share. This is a very narrow spread of estimates, implying either that COLTENE Holding is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the COLTENE Holding's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 20%, a significant reduction from annual growth of 11% 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 7.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - COLTENE Holding 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 COLTENE Holding. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on COLTENE Holding after the downgrade.

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. You can learn more about our debt analysis for free on our platform here.

We also provide an overview of the COLTENE Holding Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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