Analysts Are More Bearish On Conzzeta AG (VTX:CON) Than They Used To Be

Today is shaping up negative for Conzzeta AG (VTX:CON) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the latest downgrade, the current consensus, from the five analysts covering Conzzeta, is for revenues of CHF1.1b in 2021, which would reflect an uneasy 18% reduction in Conzzeta's sales over the past 12 months. Statutory earnings per share are anticipated to decline 12% to CHF27.55 in the same period. Prior to this update, the analysts had been forecasting revenues of CHF1.3b and earnings per share (EPS) of CHF33.95 in 2021. Indeed, we can see that the analysts are a lot more bearish about Conzzeta's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Conzzeta

Analysts made no major changes to their price target of CHF1,329, suggesting the downgrades are not expected to have a long-term impact on Conzzeta's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Conzzeta, with the most bullish analyst valuing it at CHF1,400 and the most bearish at CHF1,280 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 18% by the end of 2021. This indicates a significant reduction from annual growth of 5.0% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.8% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Conzzeta is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Conzzeta after the downgrade.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Conzzeta analysts - going out to 2023, 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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