These Analysts Think Washington H. Soul Pattinson and Company Limited's (ASX:SOL) Sales Are Under Threat

The latest analyst coverage could presage a bad day for Washington H. Soul Pattinson and Company Limited (ASX:SOL), 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 dual analysts covering Washington H. Soul Pattinson provided consensus estimates of AU$1.8b revenue in 2023, which would reflect a disturbing 36% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of AU$2.1b in 2023. It looks like forecasts have become a fair bit less optimistic on Washington H. Soul Pattinson, given the substantial drop in revenue estimates.

Check out the opportunities and risks within the AU Oil and Gas industry.

There was no particular change to the consensus price target of AU$28.25, with Washington H. Soul Pattinson's latest outlook seemingly not enough to result in a change of valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Washington H. Soul Pattinson at AU$30.60 per share, while the most bearish prices it at AU$26.90. This is a very narrow spread of estimates, implying either that Washington H. Soul Pattinson is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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 36% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 1.1% annually for the foreseeable future. So it's pretty clear that Washington H. Soul Pattinson's revenues are expected to shrink faster than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Washington H. Soul Pattinson this year. Analysts also expect revenues to shrink faster than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Washington H. Soul Pattinson going forwards.

Hungry for more information? At least one of Washington H. Soul Pattinson's dual analysts has provided estimates out to 2025, which can be seen for 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.

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.