Need To Know: The Consensus Just Cut Its Ricardo plc (LON:RCDO) Estimates For 2025

The analysts covering Ricardo plc (LON:RCDO) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the consensus from eight analysts covering Ricardo is for revenues of UK£376m in 2025, implying a concerning 21% decline in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing UK£396m of revenue in 2025. It looks like the analysts have become a bit less bullish on Ricardo, given the modest decline in revenue estimates after the latest consensus updates.

Check out our latest analysis for Ricardo

Notably, the analysts have cut their price target 15% to UK£4.17, suggesting concerns around Ricardo's valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 21% annualised revenue decline to the end of 2025. That is a notable change from historical growth of 5.8% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Ricardo is expected to lag the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Ricardo this year. They're also anticipating slower revenue growth than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Ricardo's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Ricardo after today.

Of course, this isn't the full story. At least one of Ricardo's eight analysts has provided estimates out to 2027, which can be seen for 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 with high insider ownership.

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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.