Earnings Release: Here's Why Analysts Cut Their Scandinavian Tobacco Group A/S (CPH:STG) Price Target To kr.90.00

Last week saw the newest second-quarter earnings release from Scandinavian Tobacco Group A/S (CPH:STG), an important milestone in the company's journey to build a stronger business. Revenues came in 2.8% below expectations, at kr.2.4b. Statutory earnings per share were relatively better off, with a per-share profit of kr.2.90 being roughly in line with analyst estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Taking into account the latest results, Scandinavian Tobacco Group's three analysts currently expect revenues in 2025 to be kr.9.13b, approximately in line with the last 12 months. Statutory earnings per share are forecast to descend 11% to kr.9.03 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr.9.20b and earnings per share (EPS) of kr.9.34 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

Check out our latest analysis for Scandinavian Tobacco Group

It might be a surprise to learn that the consensus price target fell 11% to kr.90.00, with the analysts clearly linking lower forecast earnings to the performance of the stock price.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 2.0% by the end of 2025. This indicates a significant reduction from annual growth of 3.5% 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 3.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Scandinavian Tobacco Group is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Scandinavian Tobacco Group's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Scandinavian Tobacco Group going out to 2027, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Scandinavian Tobacco Group you should be aware of.

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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.