Pod Point Group Holdings Plc (LON:PODP) Analysts Just Slashed This Year's Revenue Estimates By 12%

The latest analyst coverage could presage a bad day for Pod Point Group Holdings Plc (LON:PODP), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the latest downgrade, the current consensus, from the three analysts covering Pod Point Group Holdings, is for revenues of UK£70m in 2022, which would reflect a chunky 8.1% reduction in Pod Point Group Holdings' sales over the past 12 months. Losses are expected to increase slightly, to UK£0.10 per share. However, before this estimates update, the consensus had been expecting revenues of UK£80m and UK£0.095 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Pod Point Group Holdings

The consensus price target fell 28% to UK£1.19, implicitly signalling that lower earnings per share are a leading indicator for Pod Point Group Holdings' valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Pod Point Group Holdings, with the most bullish analyst valuing it at UK£2.40 and the most bearish at UK£0.80 per share. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 16% by the end of 2022. This indicates a significant reduction from annual growth of 58% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 21% per year. It's pretty clear that Pod Point Group Holdings' revenues are expected to perform substantially worse than the wider 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 Pod Point Group Holdings. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Pod Point Group Holdings' revenues are expected to grow slower than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Pod Point Group Holdings going forwards.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Pod Point Group Holdings analysts - going out to 2024, 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.