One Spirit Technology Solutions Ltd (ASX:ST1) Analyst Just Slashed Their Estimates By A Noticeable 20%

Today is shaping up negative for Spirit Technology Solutions Ltd (ASX:ST1) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the latest downgrade, the current consensus, from the sole analyst covering Spirit Technology Solutions, is for revenues of AU$124m in 2023, which would reflect a not inconsiderable 10% reduction in Spirit Technology Solutions' sales over the past 12 months. Previously, the analyst had been modelling revenues of AU$155m and earnings per share (EPS) of AU$0.005 in 2023. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a earnings per share numbers as well.

See our latest analysis for Spirit Technology Solutions

Notably, the analyst has cut their price target 57% to AU$0.13, suggesting concerns around Spirit Technology Solutions' valuation.

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 10% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 53% 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 4.6% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Spirit Technology Solutions is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Spirit Technology Solutions' revenues are expected to grow slower 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 Spirit Technology Solutions going forwards.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Spirit Technology Solutions going out as far as 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.