Today is shaping up negative for Fertiglobe plc (ADX:FERTIGLB) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. The stock price has risen 5.1% to د.إ5.37 over the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.
Following the downgrade, the most recent consensus for Fertiglobe from its nine analysts is for revenues of US$4.4b in 2022 which, if met, would be a notable 10% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$5.0b in 2022. The consensus view seems to have become more pessimistic on Fertiglobe, noting the measurable cut to revenue estimates in this update.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Fertiglobe's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 14% growth on an annualised basis. This is compared to a historical growth rate of 129% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 11% per year. So it's pretty clear that, while Fertiglobe's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Fertiglobe this year. They're also forecasting more rapid revenue growth than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Fertiglobe after today.
Unsatisfied? At least one of Fertiglobe's nine analysts has provided estimates out to 2024, 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.
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