Stock Analysis

Revenue Downgrade: Here's What Analysts Forecast For Global Fashion Group S.A. (ETR:GFG)

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The analysts covering Global Fashion Group S.A. (ETR:GFG) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the consensus from six analysts covering Global Fashion Group is for revenues of €1.1b in 2023, implying a stressful 38% decline in sales compared to the last 12 months. Per-share losses are expected to creep up to €0.52. Yet before this consensus update, the analysts had been forecasting revenues of €1.3b and losses of €0.52 per share in 2023. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also making no real change to the loss per share numbers.

Check out our latest analysis for Global Fashion Group

XTRA:GFG Earnings and Revenue Growth March 17th 2023

the analysts have cut their price target 5.2% to €2.09 per share, signalling that the declining revenue and ongoing losses are contributing to the lower 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. Currently, the most bullish analyst values Global Fashion Group at €5.00 per share, while the most bearish prices it at €0.90. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Global Fashion Group's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 38% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 9.4% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 12% annually for the foreseeable future. It's pretty clear that Global Fashion Group's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Global Fashion Group's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Global Fashion Group going forwards.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Global Fashion Group going out to 2025, 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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