One Analyst Thinks Ekopak NV's (EBR:EKOP) Revenues Are Under Threat

The analyst covering Ekopak NV (EBR:EKOP) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the solitary analyst covering Ekopak is now predicting revenues of €16m in 2022. If met, this would reflect a huge 42% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching €0.11 per share. Prior to this update, the analyst had been forecasting revenues of €20m and earnings per share (EPS) of €0.06 in 2022. There looks to have been a major change in sentiment regarding Ekopak's prospects, with a substantial drop in revenues and the analyst now forecasting a loss instead of a profit.

Our analysis indicates that EKOP is potentially overvalued!

There was no major change to the consensus price target of €20.00, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts.

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. It's clear from the latest estimates that Ekopak's rate of growth is expected to accelerate meaningfully, with the forecast 42% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 10% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.8% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect Ekopak to grow faster than the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Ekopak dropped from profits to a loss this year. While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Ekopak.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Ekopak going out as far as 2024, and you can see them 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.