Need To Know: Analysts Just Made A Substantial Cut To Their ABC arbitrage SA (EPA:ABCA) Estimates

The latest analyst coverage could presage a bad day for ABC arbitrage SA (EPA:ABCA), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the twin analysts covering ABC arbitrage, is for revenues of €43m in 2023, which would reflect a chunky 14% reduction in ABC arbitrage's sales over the past 12 months. Statutory earnings per share are supposed to dive 25% to €0.28 in the same period. Previously, the analysts had been modelling revenues of €51m and earnings per share (EPS) of €0.35 in 2023. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

See our latest analysis for ABC arbitrage

It'll come as no surprise then, to learn that the analysts have cut their price target 6.7% to €7.00.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 14% by the end of 2023. This indicates a significant reduction from annual growth of 9.7% 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 8.0% annually for the foreseeable future. It's pretty clear that ABC arbitrage'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. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that ABC arbitrage'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 ABC arbitrage.

After a downgrade like this one, it's pretty clear that previous forecasts were too optimistic. Worse, it's possible that the forecast future income could struggle to cover ABC arbitrage'sdividend payments. You can learn more, and discover the 1 possible risk we've identified, for free on our platform here.

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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.