Analysts Just Made A Major Revision To Their Anaergia Inc. (TSE:ANRG) Revenue Forecasts

One thing we could say about the analysts on Anaergia Inc. (TSE:ANRG) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After this downgrade, Anaergia's six analysts are now forecasting revenues of CA$362m in 2023. This would be a major 106% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CA$410m in 2023. The consensus view seems to have become more pessimistic on Anaergia, noting the substantial drop in revenue estimates in this update.

Our analysis indicates that ANRG is potentially overvalued!

Notably, the analysts have cut their price target 25% to CA$14.43, suggesting concerns around Anaergia's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Anaergia analyst has a price target of CA$22.00 per share, while the most pessimistic values it at CA$8.50. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Anaergia's rate of growth is expected to accelerate meaningfully, with the forecast 78% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 28% 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 11% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Anaergia to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for next year. The analysts also expect revenues to grow faster 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. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Anaergia after today.

That said, the analysts might have good reason to be negative on Anaergia, given a short cash runway. For more information, you can click here to discover this and the 2 other flags we've identified.

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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.