These Analysts Think Fertiglobe plc's (ADX:FERTIGLB) Sales Are Under Threat

Market forces rained on the parade of Fertiglobe plc (ADX:FERTIGLB) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the eight analysts covering Fertiglobe provided consensus estimates of US$3.1b revenue in 2023, which would reflect a sizeable 37% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$4.4b in 2023. The consensus view seems to have become more pessimistic on Fertiglobe, noting the pretty serious reduction to revenue estimates in this update.

See our latest analysis for Fertiglobe

Notably, the analysts have cut their price target 13% to US$1.25, suggesting concerns around Fertiglobe's valuation. 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. The most optimistic Fertiglobe analyst has a price target of US$6.45 per share, while the most pessimistic values it at US$2.80. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 37% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 52% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 11% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Fertiglobe is expected to lag the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Fertiglobe this year. They're also anticipating slower revenue growth than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Fertiglobe after today.

Need some more information? At least one of Fertiglobe's eight analysts has provided estimates out to 2025, which can be seen 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.