This DATRON AG (ETR:DAR) Analyst Is Way More Bearish Than They Used To Be

Today is shaping up negative for DATRON AG (ETR:DAR) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously. Shares are up 5.1% to €8.25 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the downgrade, the consensus from one analyst covering DATRON is for revenues of €61m in 2024, implying a measurable 5.3% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to plummet 59% to €0.46 in the same period. Prior to this update, the analyst had been forecasting revenues of €68m and earnings per share (EPS) of €0.90 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.

Check out our latest analysis for DATRON

The consensus price target fell 11% to €15.91, with the weaker earnings outlook clearly leading analyst valuation estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 5.3% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 4.1% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.5% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - DATRON is expected to lag the wider industry.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for DATRON. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of DATRON.

As you can see, the analyst clearly isn't bullish, and there might be good reason for that. We've identified some potential issues with DATRON's financials, such as concerns around earnings quality. For more information, you can click here to discover this and the 1 other flag we've identified.

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