SoftwareONE Holding AG (VTX:SWON) Analysts Are Reducing Their Forecasts For This Year

Today is shaping up negative for SoftwareONE Holding AG (VTX:SWON) 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 downgrade, the most recent consensus for SoftwareONE Holding from its eight analysts is for revenues of CHF8.2b in 2022 which, if met, would be a substantial increase on its sales over the past 12 months. Statutory earnings per share are supposed to reduce 5.6% to CHF0.73 in the same period. Prior to this update, the analysts had been forecasting revenues of CHF9.2b and earnings per share (EPS) of CHF1.01 in 2022. Indeed, we can see that the analysts are a lot more bearish about SoftwareONE Holding's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for SoftwareONE Holding

It'll come as no surprise then, to learn that the analysts have cut their price target 32% to CHF17.42. 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 SoftwareONE Holding at CHF28.00 per share, while the most bearish prices it at CHF12.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. It's clear from the latest estimates that SoftwareONE Holding's rate of growth is expected to accelerate meaningfully, with the forecast 7x annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 0.7% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.9% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that SoftwareONE Holding is expected to grow much faster than its 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. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of SoftwareONE Holding.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for SoftwareONE Holding going out to 2024, 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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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.