Downgrade: Here's How Analysts See Kempower Oyj (HEL:KEMPOWR) Performing In The Near Term

Today is shaping up negative for Kempower Oyj (HEL:KEMPOWR) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the most recent consensus for Kempower Oyj from its six analysts is for revenues of €320m in 2024 which, if met, would be a notable 18% increase on its sales over the past 12 months. Statutory earnings per share are anticipated to dive 74% to €0.089 in the same period. Prior to this update, the analysts had been forecasting revenues of €361m and earnings per share (EPS) of €0.48 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.

Check out our latest analysis for Kempower Oyj

Analysts made no major changes to their price target of kr338, suggesting the downgrades are not expected to have a long-term impact on Kempower Oyj's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Kempower Oyj at kr436 per share, while the most bearish prices it at kr217. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. It's pretty clear that there is an expectation that Kempower Oyj's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 25% growth on an annualised basis. This is compared to a historical growth rate of 90% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.8% annually. So it's pretty clear that, while Kempower Oyj's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Kempower Oyj. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Kempower Oyj.

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 Kempower Oyj going out to 2026, and you can see them 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com