Downgrade: Here's How This Analyst Sees Kerlink SA (EPA:ALKLK) Performing In The Near Term

One thing we could say about the covering analyst on Kerlink SA (EPA:ALKLK) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.

Following the latest downgrade, the lone analyst covering Kerlink provided consensus estimates of €16m revenue in 2023, which would reflect a definite 15% decline on its sales over the past 12 months. Losses are expected to be contained, narrowing 15% per share from last year to €0.40 per share. Yet before this consensus update, the analyst had been forecasting revenues of €19m and losses of €0.20 per share in 2023. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Kerlink

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. Over the past five years, revenues have declined around 2.4% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 15% decline in revenue until the end of 2023. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 11% per year. So while a broad number of companies are forecast to grow, unfortunately Kerlink is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Kerlink. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Kerlink's revenues are expected to grow slower than the wider market. Given the serious cut to this year's outlook, it's clear that the analyst has turned more bearish on Kerlink, and we wouldn't blame shareholders for feeling a little more cautious themselves.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Kerlink going out as far as 2025, and you can see them free on our platform here.

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.