One thing we could say about the analysts on Aroundtown SA (ETR:AT1) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the latest downgrade, the current consensus, from the nine analysts covering Aroundtown, is for revenues of €1.1b in 2022, which would reflect a sizeable 24% reduction in Aroundtown's sales over the past 12 months. Before the latest update, the analysts were foreseeing €1.2b of revenue in 2022. The consensus view seems to have become more pessimistic on Aroundtown, noting the measurable cut to revenue estimates in this update.
We'd point out that there was no major changes to their price target of €7.12, suggesting the latest estimates were not enough to shift their view on the value of the business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Aroundtown at €8.70 per share, while the most bearish prices it at €5.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 24% by the end of 2022. This indicates a significant reduction from annual growth of 21% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 4.0% per year. The forecasts do look bearish for Aroundtown, since they're expecting it to shrink faster than the industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. Analysts also expect revenues to shrink faster than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Aroundtown after today.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Aroundtown's business, like its declining profit margins. Learn more, and discover the 2 other warning signs we've identified, 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.