What You Need To Know About The Arbonia AG (VTX:ARBN) Analyst Downgrade Today

The analysts covering Arbonia AG (VTX:ARBN) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Shares are up 6.8% to CHF16.30 in the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the latest consensus from Arbonia's three analysts is for revenues of CHF1.1b in 2021, which would reflect a modest 4.3% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 43% to CHF0.61. Before this latest update, the analysts had been forecasting revenues of CHF1.3b and earnings per share (EPS) of CHF0.71 in 2021. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a real cut to earnings per share numbers as well.

Check out our latest analysis for Arbonia

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. We would highlight that Arbonia's revenue growth is expected to slow, with the forecast 4.3% annualised growth rate until the end of 2021 being well below the historical 7.1% p.a. growth over the last five years. Compare this to the 5 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.6% per year. Factoring in the forecast slowdown in growth, it looks like Arbonia is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Arbonia. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Arbonia after today.

In light of the downgrade, our automated discounted cash flow valuation tool suggests that Arbonia could now be moderately overvalued. Find out why, and see how we estimate the valuation for 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. 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.
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