Bolloré SE (EPA:BOL) Analysts Just Slashed This Year's Estimates

Market forces rained on the parade of Bolloré SE (EPA:BOL) shareholders today, when the analysts downgraded their forecasts for this year. 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. At €5.56, shares are up 9.7% in the past 7 days. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the consensus from two analysts covering Bolloré is for revenues of €19b in 2023, implying a definite 8.7% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to dive 40% to €0.063 in the same period. Prior to this update, the analysts had been forecasting revenues of €22b and earnings per share (EPS) of €0.22 in 2023. 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.

View our latest analysis for Bolloré

Analysts made no major changes to their price target of €6.17, suggesting the downgrades are not expected to have a long-term impact on Bolloré's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Bolloré analyst has a price target of €6.60 per share, while the most pessimistic values it at €5.70. This is a very narrow spread of estimates, implying either that Bolloré is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. One more thing stood out to us about these estimates, and it's the idea that Bolloré's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 8.7% to the end of 2023. This tops off a historical decline of 2.5% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to decline 1.1% annually. While this is interesting, Bolloré's, revenues are still expected to shrink next year, and at a faster rate 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 they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Bolloré revenue is expected to perform worse 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 Bolloré.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Bolloré going out as far as 2024, and you can see them 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.