Revenue Downgrade: Here's What Analysts Forecast For MA Financial Group Limited (ASX:MAF)

The latest analyst coverage could presage a bad day for MA Financial Group Limited (ASX:MAF), 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. Shares are up 4.4% to AU$4.49 in 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.

After the downgrade, the consensus from MA Financial Group's dual analysts is for revenues of AU$282m in 2023, which would reflect a stressful 61% decline in sales compared to the last year of performance. Statutory earnings per share are presumed to rise 3.5% to AU$0.26. Before this latest update, the analysts had been forecasting revenues of AU$319m and earnings per share (EPS) of AU$0.28 in 2023. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a minor downgrade to EPS estimates to boot.

See our latest analysis for MA Financial Group

Despite the cuts to forecast earnings, there was no real change to the AU$7.10 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

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 61% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 41% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 2.8% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - MA Financial Group is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that MA Financial Group's revenues are expected to grow slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on MA Financial Group after today.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with MA Financial Group's business, like concerns around earnings quality. Learn more, and discover the 1 other flag we've identified, for 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. 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.