These Analysts Think ad pepper media International N.V.'s (ETR:APM) Earnings Are Under Threat

The analysts covering ad pepper media International N.V. (ETR:APM) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the twin analysts covering ad pepper media International, is for revenues of €25m in 2022, which would reflect a small 7.1% reduction in ad pepper media International's sales over the past 12 months. After this downgrade, the company is anticipated to report a loss of €0.015 in 2022, a sharp decline from a profit over the last year. Prior to this update, the analysts had been forecasting revenues of €29m and earnings per share (EPS) of €0.08 in 2022. There looks to have been a major change in sentiment regarding ad pepper media International's prospects, with a measurable cut to revenues and the analysts now forecasting a loss instead of a profit.

See our latest analysis for ad pepper media International

The consensus price target fell 34% to €4.15, implicitly signalling that lower earnings per share are a leading indicator for ad pepper media International's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on ad pepper media International, with the most bullish analyst valuing it at €4.60 and the most bearish at €3.70 per share. This is a very narrow spread of estimates, implying either that ad pepper media International is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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 also point out that the forecast 7.1% annualised revenue decline to the end of 2022 is better than the historical trend, which saw revenues shrink 26% annually over the past five years By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 5.9% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect ad pepper media International to suffer worse than the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for ad pepper media International dropped from profits to a loss this year. 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 ad pepper media International.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for ad pepper media International going out as far as 2024, and you can see them 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 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.