Newsflash: East Side Games Group Inc. (TSE:EAGR) Analysts Have Been Trimming Their Revenue Forecasts

The analysts covering East Side Games Group Inc. (TSE:EAGR) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the consensus from five analysts covering East Side Games Group is for revenues of CA$91m in 2023, implying a measurable 5.6% decline in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 89% to CA$0.01 per share. Yet before this consensus update, the analysts had been forecasting revenues of CA$115m and losses of CA$0.02 per share in 2023. We can see there's definitely been a change in sentiment in this update, with the analysts administering a meaningful downgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

See our latest analysis for East Side Games Group

the analysts have cut their price target 17% to CA$2.29 per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 11% by the end of 2023. This indicates a significant reduction from annual growth of 20% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 11% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - East Side Games Group is expected to lag the wider industry.

The Bottom Line

Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales 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 East Side Games Group going forwards.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple East Side Games Group analysts - going out to 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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