Earnings Release: Here's Why Analysts Cut Their hGears AG (ETR:HGEA) Price Target To €2.73

The half-yearly results for hGears AG (ETR:HGEA) were released last week, making it a good time to revisit its performance. Revenues were €51m, with hGears reporting some 3.1% below analyst expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for hGears

Taking into account the latest results, hGears' three analysts currently expect revenues in 2024 to be €105.1m, approximately in line with the last 12 months. The loss per share is expected to ameliorate slightly, reducing to €1.42. Before this latest report, the consensus had been expecting revenues of €105.0m and €1.42 per share in losses.

As a result, it's unexpected to see that the consensus price target fell 15% to €2.73, with the analysts seemingly becoming more concerned about ongoing losses, despite making no major changes to their forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on hGears, with the most bullish analyst valuing it at €2.90 and the most bearish at €2.50 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting hGears is an easy business to forecast or the the analysts are all using similar assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would also point out that the forecast 2.1% annualised revenue decline to the end of 2024 is better than the historical trend, which saw revenues shrink 8.6% annually over the past three years By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 5.7% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect hGears to suffer worse than the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of hGears' future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple hGears analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with hGears , and understanding them should be part of your investment process.

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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.