Time To Worry? Analysts Just Downgraded Their CEZ, a. s. (SEP:CEZ) Outlook

Today is shaping up negative for CEZ, a. s. (SEP:CEZ) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. The stock price has risen 5.9% to Kč1,202 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After this downgrade, CEZ a. s' nine analysts are now forecasting revenues of Kč303b in 2023. This would be a modest 6.3% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of Kč340b in 2023. The consensus view seems to have become more pessimistic on CEZ a. s, noting the substantial drop in revenue estimates in this update.

View our latest analysis for CEZ a. s

There was no particular change to the consensus price target of Kč967, with CEZ a. s' latest outlook seemingly not enough to result in a change of valuation. 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. The most optimistic CEZ a. s analyst has a price target of Kč1,393 per share, while the most pessimistic values it at Kč780. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of CEZ a. s'historical trends, as the 6.3% annualised revenue growth to the end of 2023 is roughly in line with the 7.5% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 4.9% annually. So not only is CEZ a. s expected to maintain its revenue growth despite the wider downturn, it's also forecast to grow faster than the industry as a whole.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. The analysts also expect revenues to perform better than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of CEZ a. s going forwards.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with CEZ a. s, including concerns around earnings quality. Learn more, and discover the 1 other concern we've identified, 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. 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.