Today is shaping up negative for eQ Oyj (HEL:EQV1V) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.
Following the downgrade, the latest consensus from eQ Oyj's solitary analyst is for revenues of €77m in 2023, which would reflect a credible 3.0% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to rise 5.0% to €0.88. Previously, the analyst had been modelling revenues of €86m and earnings per share (EPS) of €1.01 in 2023. Indeed, we can see that the analyst is a lot more bearish about eQ Oyj's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
View our latest analysis for eQ Oyj
It'll come as no surprise then, to learn that the analyst has cut their price target 9.1% to €20.00.
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. It's pretty clear that there is an expectation that eQ Oyj's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 4.0% growth on an annualised basis. This is compared to a historical growth rate of 16% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.5% per year. Factoring in the forecast slowdown in growth, it seems obvious that eQ Oyj is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that eQ Oyj'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 eQ Oyj.
There might be good reason for analyst bearishness towards eQ Oyj, like the risk of cutting its dividend. Learn more, and discover the 1 other warning sign 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.
About HLSE:EQV1V
Excellent balance sheet and fair value.
