What Does The Future Hold For Burford Capital Limited (LON:BUR)? These Analysts Have Been Cutting Their Estimates

One thing we could say about the analysts on Burford Capital Limited (LON:BUR) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the consensus from Burford Capital's four analysts is for revenues of US$617m in 2024, which would reflect a painful 48% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing US$737m of revenue in 2024. The consensus view seems to have become more pessimistic on Burford Capital, noting the measurable cut to revenue estimates in this update.

Check out our latest analysis for Burford Capital

There was no particular change to the consensus price target of US$20.75, with Burford Capital's latest outlook seemingly not enough to result in a change of valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Burford Capital, with the most bullish analyst valuing it at US$23.29 and the most bearish at US$18.83 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Burford Capital's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 58% by the end of 2024. This indicates a significant reduction from annual growth of 6.9% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 9.8% per year. The forecasts do look bearish for Burford Capital, since they're expecting it to shrink faster than the industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. The analysts also expect revenues to shrink faster than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Burford Capital after today.

Need some more information? We have estimates for Burford Capital from its four analysts out until 2026, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies backed by insiders.

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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.