These Analysts Just Made An Incredible Downgrade To Their Brockhaus Capital Management AG (FRA:BKHT) EPS Forecasts

One thing we could say about the analysts on Brockhaus Capital Management AG (FRA:BKHT) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

After this downgrade, Brockhaus Capital Management's dual analysts are now forecasting revenues of €50m in 2020. This would be a sizeable 43% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 64% to €0.43. Yet before this consensus update, the analysts had been forecasting revenues of €61m and losses of €0.20 per share in 2020. 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 expecting losses per share to increase.

Check out our latest analysis for Brockhaus Capital Management

The consensus price target fell 7.9% to €42.50, implicitly signalling that lower earnings per share are a leading indicator for Brockhaus Capital Management's 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 Brockhaus Capital Management at €53.00 per share, while the most bearish prices it at €35.50. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Brockhaus Capital Management's revenue growth is expected to slow, with forecast 43% increase next year well below the historical 248% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 16% next year. So it's pretty clear that, while Brockhaus Capital Management's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Brockhaus Capital Management. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Brockhaus Capital Management going out as far as 2022, 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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