Analyst Forecasts Just Became More Bearish On Continental Aktiengesellschaft (ETR:CON)

Market forces rained on the parade of Continental Aktiengesellschaft (ETR:CON) shareholders today, when the analysts downgraded their 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.

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Following the latest downgrade, the current consensus, from the eight analysts covering Continental, is for revenues of €20b in 2025, which would reflect a stressful 50% reduction in Continental's sales over the past 12 months. Before the latest update, the analysts were foreseeing €39b of revenue in 2025. It looks like forecasts have become a fair bit less optimistic on Continental, given the pretty serious reduction to revenue estimates.

View our latest analysis for Continental

Notably, the analysts have cut their price target 16% to €71.47, suggesting concerns around Continental's valuation.

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. We would highlight that sales are expected to reverse, with a forecast 75% annualised revenue decline to the end of 2025. That is a notable change from historical growth of 2.7% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 5.8% annually for the foreseeable future. So it's pretty clear that Continental's revenues are expected to shrink faster than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Continental this year. They're also forecasting for revenues to shrink at a quicker rate than companies in the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Continental going forwards.

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. To see more of our financial analysis, you can click through to our free platform to learn more about its balance sheet and specific concerns we've identified.

You can also see our analysis of Continental's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.