Earnings Release: Here's Why Analysts Cut Their Solocal Group S.A. (EPA:LOCAL) Price Target To €1.50

There's been a major selloff in Solocal Group S.A. (EPA:LOCAL) shares in the week since it released its full-year report, with the stock down 46% to €0.21. It was an okay report, and revenues came in at €400m, approximately in line with analyst estimates leading up to the results announcement. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Solocal Group

Following last week's earnings report, Solocal Group's dual analysts are forecasting 2023 revenues to be €393.0m, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of €388.1m and earnings per share (EPS) of €0.17 in 2023. Overall, while the analysts have reconfirmed their revenue estimates, the consensus now no longer provides an EPS estimate, suggesting that the market believes revenue is more important after these latest results.

Intriguingly,the analysts have cut their price target 9.1% to €1.50 showing a clear decline in sentiment around Solocal Group's valuation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would also point out that the forecast 1.7% annualised revenue decline to the end of 2023 is better than the historical trend, which saw revenues shrink 14% annually 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 grow 9.4% annually. So while a broad number of companies are forecast to grow, unfortunately Solocal Group is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The clear take away from these updates is that the analysts made no change to their revenue estimates for next year, with the business apparently performing in line with their models. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Solocal Group's revenues are expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Solocal Group's future valuation.

We have estimates for Solocal Group from its dual analysts out to 2025, and you can see them free on our platform here.

It is also worth noting that we have found 4 warning signs for Solocal Group (2 are potentially serious!) that you need to take into consideration.

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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.