What You Need To Know About The Vonovia SE (ETR:VNA) Analyst Downgrade Today

Today is shaping up negative for Vonovia SE (ETR:VNA) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the consensus from Vonovia's eight analysts is for revenues of €3.3b in 2022, which would reflect a stressful 37% decline in sales compared to the last year of performance. Prior to the latest estimates, the analysts were forecasting revenues of €3.9b in 2022. It looks like forecasts have become a fair bit less optimistic on Vonovia, given the substantial drop in revenue estimates.

View our latest analysis for Vonovia

We'd point out that there was no major changes to their price target of €61.90, 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. The most optimistic Vonovia analyst has a price target of €73.50 per share, while the most pessimistic values it at €51.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 37% by the end of 2022. This indicates a significant reduction from annual growth of 6.2% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 4.8% annually for the foreseeable future. So it's pretty clear that Vonovia's revenues are expected to shrink faster than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Vonovia this year. They're also forecasting for revenues to shrink at a quicker rate than companies in the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Vonovia after today.

That said, the analysts might have good reason to be negative on Vonovia, given dilutive stock issuance over the past year. Learn more, and discover the 4 other concerns we've identified, 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 that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.