One Softing AG (ETR:SYT) Broker Analyst Just Cut Their Revenue Numbers By 11%

Market forces rained on the parade of Softing AG (ETR:SYT) shareholders today, when the covering analyst downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the solitary analyst covering Softing provided consensus estimates of €93m revenue in 2024, which would reflect a small 6.7% decline on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 95% to €0.06. Prior to this update, the analyst had been forecasting revenues of €105m and earnings per share (EPS) of €0.11 in 2024. There looks to have been a major change in sentiment regarding Softing's prospects, with a measurable cut to revenues and the analyst now forecasting a loss instead of a profit.

View our latest analysis for Softing

The consensus price target fell 17% to €6.50, implicitly signalling that lower earnings per share are a leading indicator for Softing's valuation.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 6.7% by the end of 2024. This indicates a significant reduction from annual growth of 5.8% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Softing is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analyst is expecting Softing to become unprofitable this year. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Softing's revenues are expected to grow 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 Softing.

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 Softing's business, like the risk of cutting its dividend. Learn more, and discover the 2 other flags we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.