News Flash: One ARYZTA AG (VTX:ARYN) Analyst Has Been Trimming Their Revenue Forecasts

The latest analyst coverage could presage a bad day for ARYZTA AG (VTX:ARYN), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Surprisingly the share price has been buoyant, rising 11% to CHF1.68 in the past 7 days. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

Following the downgrade, the current consensus from ARYZTA's solitary analyst is for revenues of €2.3b in 2024 which - if met - would reflect a satisfactory 5.2% increase on its sales over the past 12 months. Statutory earnings per share are presumed to surge 46% to €0.10. Prior to this update, the analyst had been forecasting revenues of €2.6b and earnings per share (EPS) of €0.11 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a substantial drop in revenue estimates and a small dip in earnings per share numbers as well.

Check out our latest analysis for ARYZTA

The analyst made no major changes to their price target of €2.14, suggesting the downgrades are not expected to have a long-term impact on ARYZTA'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 ARYZTA analyst has a price target of €2.29 per share, while the most pessimistic values it at €2.03. This is a very narrow spread of estimates, implying either that ARYZTA is an easy company to value, or - more likely - the analyst is relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that ARYZTA's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 5.2% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 12% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 3.5% per year. So it looks like ARYZTA is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will perform better than 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 ARYZTA after today.

A high debt burden combined with a downgrade of this magnitude always gives us some reason for concern, especially if these forecasts are just the first sign of a business downturn. You can learn more about our debt analysis for free on our platform here.

We also provide an overview of the ARYZTA Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.