Need To Know: The Consensus Just Cut Its Openpay Group Ltd (ASX:OPY) Estimates For 2022

The analysts covering Openpay Group Ltd (ASX:OPY) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. 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 downgrade, the latest consensus from Openpay Group's two analysts is for revenues of AU$34m in 2022, which would reflect a sizeable 25% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 31% to AU$0.42. However, before this estimates update, the consensus had been expecting revenues of AU$43m and AU$0.42 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also making no real change to the loss per share numbers.

View our latest analysis for Openpay Group

the analysts have cut their price target 16% to AU$0.68 per share, signalling that the declining revenue and ongoing losses are contributing to the lower valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Openpay Group at AU$1.00 per share, while the most bearish prices it at AU$0.35. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Openpay Group's growth to accelerate, with the forecast 25% annualised growth to the end of 2022 ranking favourably alongside historical growth of 19% per annum over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Openpay Group is expected to grow much faster than its industry.

The Bottom Line

While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Openpay Group going forwards.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Openpay Group's financials, such as a short cash runway. Learn more, and discover the 3 other risks 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.