One Merkur PrivatBank KgaA (ETR:MBK) Broker Just Cut Their Revenue Forecasts By 12%

Market forces rained on the parade of Merkur PrivatBank KgaA (ETR:MBK) shareholders today, when the covering analyst 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. At €13.90, shares are up 8.6% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the downgrade, the consensus from single analyst covering Merkur PrivatBank KgaA is for revenues of €84m in 2022, implying an uncomfortable 11% decline in sales compared to the last 12 months. Statutory earnings per share are supposed to decrease 5.0% to €1.19 in the same period. Previously, the analyst had been modelling revenues of €95m and earnings per share (EPS) of €1.19 in 2022. So there's been a clear change in analyst sentiment in the recent update, with the analyst making a measurable cut to revenues and reconfirming their earnings per share estimates.

View our latest analysis for Merkur PrivatBank KgaA

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 11% by the end of 2022. This indicates a significant reduction from annual growth of 24% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Merkur PrivatBank KgaA is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analyst reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Merkur PrivatBank KgaA going forwards.

Uncomfortably, our automated valuation tool also suggests that Merkur PrivatBank KgaA stock could be overvalued following the downgrade. Shareholders could be left disappointed if these estimates play out. Find out why, and see how we estimate the valuation for free on our platform 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.