Bearish: Analysts Just Cut Their Talgo, S.A. (BME:TLGO) Revenue and EPS estimates

One thing we could say about the analysts on Talgo, S.A. (BME:TLGO) - 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 analysts have soured majorly on the business.

Following the downgrade, the consensus from eight analysts covering Talgo is for revenues of €468m in 2022, implying a small 2.8% decline in sales compared to the last 12 months. Per-share earnings are expected to increase 4.2% to €0.19. Before this latest update, the analysts had been forecasting revenues of €544m and earnings per share (EPS) of €0.24 in 2022. Indeed, we can see that the analysts are a lot more bearish about Talgo's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Talgo

It'll come as no surprise then, to learn that the analysts have cut their price target 7.5% to €4.41. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Talgo at €5.80 per share, while the most bearish prices it at €2.90. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Talgo's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 5.4% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 8.7% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.3% per year. It's pretty clear that Talgo's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales 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 Talgo.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Talgo's financials, such as concerns around earnings quality. Learn more, and discover the 2 other warning signs 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.

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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.