Revenue Downgrade: Here's What Analysts Forecast For DO & CO Aktiengesellschaft (VIE:DOC)

Today is shaping up negative for DO & CO Aktiengesellschaft (VIE:DOC) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. 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 current consensus, from the four analysts covering DO & CO, is for revenues of €405m in 2021, which would reflect a painful 25% reduction in DO & CO's sales over the past 12 months. Losses are predicted to fall substantially, shrinking 72% to €2.25. Yet before this consensus update, the analysts had been forecasting revenues of €541m and losses of €2.26 per share in 2021. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to this year's revenue estimates, while at the same time holding losses per share steady.

See our latest analysis for DO & CO

The consensus price target rose 9.2% to €64.77, seeming to imply that weaker revenue sentiment is not expected to have a major impact on the company's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic DO & CO analyst has a price target of €92.00 per share, while the most pessimistic values it at €45.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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. Over the past five years, revenues have declined around 3.4% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 25% decline in revenue next year. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to grow 7.0% next year. So it's pretty clear that, while it does have declining revenues, the analysts also expect DO & CO to suffer worse than the wider industry.

The Bottom Line

Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that DO & CO's revenues are expected to grow slower than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given the stark change in sentiment, we'd understand if investors became more cautious on DO & CO after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for DO & CO going out to 2023, 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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