Need To Know: The Consensus Just Cut Its East Side Games Group Inc. (TSE:EAGR) Estimates For 2023

One thing we could say about the analysts on East Side Games Group Inc. (TSE:EAGR) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

After the downgrade, the five analysts covering East Side Games Group are now predicting revenues of CA$116m in 2023. If met, this would reflect a solid 11% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CA$131m in 2023. The consensus view seems to have become more pessimistic on East Side Games Group, noting the substantial drop in revenue estimates in this update.

See our latest analysis for East Side Games Group

There was no particular change to the consensus price target of CA$3.06, with East Side Games Group's latest outlook seemingly not enough to result in a change of valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values East Side Games Group at CA$5.00 per share, while the most bearish prices it at CA$1.75. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the East Side Games Group's past performance and to peers in the same industry. We would highlight that East Side Games Group's revenue growth is expected to slow, with the forecast 14% annualised growth rate until the end of 2023 being well below the historical 25% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 13% annually. Factoring in the forecast slowdown in growth, it looks like East Side Games Group is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for East Side Games Group this year. Analysts also expect revenues to grow approximately in line with the wider market. 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 East Side Games Group after today.

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 East Side Games Group's financials, such as concerns around earnings quality. For more information, you can click here to discover this and the 1 other risk we've identified.

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.