Remedy Entertainment Oyj (HEL:REMEDY) Just Reported And Analysts Have Been Cutting Their Estimates

Shareholders might have noticed that Remedy Entertainment Oyj (HEL:REMEDY) filed its annual result this time last week. The early response was not positive, with shares down 2.4% to €21.95 in the past week. Remedy Entertainment Oyj reported revenues of €44m, in line with expectations, but it unfortunately also reported (statutory) losses of €0.13 per share, which were slightly larger than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Remedy Entertainment Oyj

Taking into account the latest results, the current consensus, from the three analysts covering Remedy Entertainment Oyj, is for revenues of €37.2m in 2023, which would reflect a considerable 15% reduction in Remedy Entertainment Oyj's sales over the past 12 months. Losses are forecast to balloon 422% to €0.67 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of €39.2m and losses of €0.50 per share in 2023. While this year's revenue estimates dropped there was also a regrettable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The average price target was broadly unchanged at €27.50, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the 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 Remedy Entertainment Oyj at €30.00 per share, while the most bearish prices it at €25.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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 sales are expected to slow, with a forecast annualised revenue decline of 15% by the end of 2023. This indicates a significant reduction from annual growth of 22% 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 6.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Remedy Entertainment Oyj is expected to lag the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Remedy Entertainment Oyj. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at €27.50, with the latest estimates not enough to have an impact on their price targets.

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 Remedy Entertainment Oyj going out to 2025, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Remedy Entertainment Oyj .

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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.