Need To Know: The Consensus Just Cut Its Kapsch TrafficCom AG (VIE:KTCG) Estimates For 2021

The latest analyst coverage could presage a bad day for Kapsch TrafficCom AG (VIE:KTCG), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. 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 two analysts covering Kapsch TrafficCom provided consensus estimates of €510m revenue in 2021, which would reflect an uneasy 11% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of €569m in 2021. It looks like forecasts have become a fair bit less optimistic on Kapsch TrafficCom, given the substantial drop in revenue estimates.

See our latest analysis for Kapsch TrafficCom

Additionally, the consensus price target for Kapsch TrafficCom increased 13% to €17.83, showing a clear increase in optimism from the analysts involved. 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. Currently, the most bullish analyst values Kapsch TrafficCom at €23.00 per share, while the most bearish prices it at €12.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Kapsch TrafficCom shareholders.

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 20% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 4.5% 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 9.0% annually for the foreseeable future. It's pretty clear that Kapsch TrafficCom's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth 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. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Kapsch TrafficCom going forwards.

Unanswered questions? We have estimates for Kapsch TrafficCom from its two analysts out until 2025, 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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