Downgrade: Here's How Analysts See Don't Nod Entertainment S.A. (EPA:ALDNE) Performing In The Near Term

One thing we could say about the analysts on Don't Nod Entertainment S.A. (EPA:ALDNE) - 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 the analysts have soured majorly on the business.

Following the latest downgrade, the three analysts covering Don't Nod Entertainment provided consensus estimates of €9.4m revenue in 2023, which would reflect a sizeable 70% decline on its sales over the past 12 months. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of €0.01 per share in 2023. Previously, the analysts had been modelling revenues of €17m and earnings per share (EPS) of €0.13 in 2023. So we can see that the consensus has become notably more bearish on Don't Nod Entertainment's outlook with these numbers, making a pretty serious reduction to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

See our latest analysis for Don't Nod Entertainment

The consensus price target fell 13% to €12.70, implicitly signalling that lower earnings per share are a leading indicator for Don't Nod Entertainment's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Don't Nod Entertainment's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 70% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 17% 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 0.7% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Don't Nod Entertainment is expected to lag the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Don't Nod Entertainment dropped from profits to a loss this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

There might be good reason for analyst bearishness towards Don't Nod Entertainment, like concerns around earnings quality. For more information, you can click here to discover this and the 2 other flags we've identified.

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 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.