One Groupe Tera SA (EPA:ALGTR) Broker Analyst Just Cut Their Revenue Numbers By 10%

The analyst covering Groupe Tera SA (EPA:ALGTR) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the current consensus from Groupe Tera's one analyst is for revenues of €16m in 2023 which - if met - would reflect a meaningful 16% increase on its sales over the past 12 months. After this downgrade, the company is anticipated to report a loss of €0.03 in 2023, a sharp decline from a profit over the last year. Prior to this update, the analyst had been forecasting revenues of €18m and earnings per share (EPS) of €0.32 in 2023. So we can see that the consensus has become notably more bearish on Groupe Tera's outlook with these numbers, making a measurable cut 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.

View our latest analysis for Groupe Tera

The consensus price target was broadly unchanged at €9.50, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Groupe Tera's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Groupe Tera's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 16% growth on an annualised basis. This is compared to a historical growth rate of 44% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 19% annually. So it's pretty clear that, while Groupe Tera's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that the analyst is expecting Groupe Tera to become unprofitable this year. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. 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 Groupe Tera.

As you can see, this broker clearly isn't bullish, and there might be good reason for that. We've identified some potential issues with Groupe Tera's financials, such as concerns around earnings quality. For more information, you can click here to discover this and the 3 other concerns 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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