Analysts Just Made A Major Revision To Their Air Arabia PJSC (DFM:AIRARABIA) Revenue Forecasts

The latest analyst coverage could presage a bad day for Air Arabia PJSC (DFM:AIRARABIA), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the consensus from six analysts covering Air Arabia PJSC is for revenues of د.إ1.7b in 2021, implying a measurable 6.0% decline in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing د.إ3.0b of revenue in 2021. The consensus view seems to have become more pessimistic on Air Arabia PJSC, noting the sizeable cut to revenue estimates in this update.

Check out our latest analysis for Air Arabia PJSC

There was no particular change to the consensus price target of د.إ1.33, with Air Arabia PJSC's latest outlook seemingly not enough to result in a change of valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Air Arabia PJSC at د.إ1.65 per share, while the most bearish prices it at د.إ1.00. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Air Arabia PJSC's past performance and to peers in the same industry. Over the past five years, revenues have declined around 1.8% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 6.0% decline in revenue next year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 31% per year. So while a broad number of companies are forecast to grow, unfortunately Air Arabia PJSC is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Air Arabia PJSC this year. They're also anticipating slower revenue growth than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Air Arabia PJSC going forwards.

Of course, there's always more to the story. We have estimates for Air Arabia PJSC from its six analysts out until 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. 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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