Need To Know: The Consensus Just Cut Its VERBUND AG (VIE:VER) Estimates For 2023

Market forces rained on the parade of VERBUND AG (VIE:VER) shareholders today, when the analysts downgraded their forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the consensus from VERBUND's eight analysts is for revenues of €6.6b in 2023, which would reflect a substantial 36% decline in sales compared to the last year of performance. Per-share earnings are expected to bounce 46% to €7.22. Previously, the analysts had been modelling revenues of €7.8b and earnings per share (EPS) of €7.34 in 2023. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a substantial drop in revenues and reconfirming their earnings per share estimates.

Check out our latest analysis for VERBUND

The average price target was steady at €92.07 even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic VERBUND analyst has a price target of €110 per share, while the most pessimistic values it at €78.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 36% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 25% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 5.2% per year. The forecasts do look bearish for VERBUND, since they're expecting it to shrink faster than the industry.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that VERBUND revenue is expected to perform worse than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on VERBUND after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple VERBUND analysts - going out to 2025, and you can see them 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.