This H&R GmbH & Co. KGaA (ETR:2HRA) Analyst Is Way More Bearish Than They Used To Be

Today is shaping up negative for H&R GmbH & Co. KGaA (ETR:2HRA) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.

Following the latest downgrade, H&R GmbH KGaA's single analyst currently expects revenues in 2024 to be €1.3b, approximately in line with the last 12 months. Statutory earnings per share are anticipated to dip 2.8% to €0.25 in the same period. Previously, the analyst had been modelling revenues of €1.5b and earnings per share (EPS) of €0.39 in 2024. Indeed, we can see that the analyst is a lot more bearish about H&R GmbH KGaA's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for H&R GmbH KGaA

What's most unexpected is that the consensus price target rose 14% to €5.70, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

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. It's pretty clear that there is an expectation that H&R GmbH KGaA's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.4% growth on an annualised basis. This is compared to a historical growth rate of 9.1% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.3% annually. Factoring in the forecast slowdown in growth, it seems obvious that H&R GmbH KGaA is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that H&R GmbH KGaA's revenues are expected to grow slower than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of H&R GmbH KGaA.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies backed by insiders.

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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.