Time To Worry? Analysts Are Downgrading Their M1 Kliniken AG (ETR:M12) Outlook

One thing we could say about the analysts on M1 Kliniken AG (ETR:M12) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the latest downgrade, the two analysts covering M1 Kliniken provided consensus estimates of €290m revenue in 2022, which would reflect a small 7.7% decline on its sales over the past 12 months. Statutory earnings per share are anticipated to plunge 31% to €0.33 in the same period. Previously, the analysts had been modelling revenues of €358m and earnings per share (EPS) of €0.43 in 2022. Indeed, we can see that the analysts are a lot more bearish about M1 Kliniken's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for M1 Kliniken

The consensus price target fell 7.1% to €13.00, with the weaker earnings outlook clearly leading analyst valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic M1 Kliniken analyst has a price target of €14.00 per share, while the most pessimistic values it at €12.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting M1 Kliniken is an easy business to forecast or the underlying assumptions are obvious.

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 7.7% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 46% 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 5.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - M1 Kliniken is expected to lag the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for M1 Kliniken. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that M1 Kliniken's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of M1 Kliniken.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2024, which can be seen 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.