Time To Worry? Analysts Are Downgrading Their Instone Real Estate Group SE (ETR:INS) Outlook

The latest analyst coverage could presage a bad day for Instone Real Estate Group SE (ETR:INS), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. 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 downgrade, the latest consensus from Instone Real Estate Group's four analysts is for revenues of €881m in 2022, which would reflect a solid 17% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to tumble 57% to €0.76 in the same period. Previously, the analysts had been modelling revenues of €994m and earnings per share (EPS) of €1.08 in 2022. Indeed, we can see that the analysts are a lot more bearish about Instone Real Estate Group's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Instone Real Estate Group

Analysts made no major changes to their price target of €15.65, suggesting the downgrades are not expected to have a long-term impact on Instone Real Estate Group's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Instone Real Estate Group, with the most bullish analyst valuing it at €23.00 and the most bearish at €13.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Instone Real Estate Group's revenue growth is expected to slow, with the forecast 17% annualised growth rate until the end of 2022 being well below the historical 24% p.a. growth over the last five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 11% annually. So it's clear that despite the slowdown in growth, Instone Real Estate Group is still expected to grow meaningfully faster than 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 Instone Real Estate Group. Sadly they also cut their revenue estimates, although at least the company is expected to perform a bit better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Instone Real Estate Group.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Instone Real Estate Group analysts - going out to 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.