Revenue Downgrade: Here's What Analysts Forecast For Molten Ventures Plc (LON:GROW)

Market forces rained on the parade of Molten Ventures Plc (LON:GROW) shareholders today, when the analysts downgraded their 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. Surprisingly the share price has been buoyant, rising 14% to UK£3.66 in the past 7 days. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

Following the latest downgrade, the two analysts covering Molten Ventures provided consensus estimates of UK£115m revenue in 2023, which would reflect a stressful 67% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£142m in 2023. The consensus view seems to have become more pessimistic on Molten Ventures, noting the substantial drop in revenue estimates in this update.

Our analysis indicates that GROW is potentially undervalued!

There was no particular change to the consensus price target of UK£8.98, with Molten Ventures' 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. Currently, the most bullish analyst values Molten Ventures at UK£10.20 per share, while the most bearish prices it at UK£8.12. 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 Molten Ventures' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 67% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 46% 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 5.8% annually for the foreseeable future. It's pretty clear that Molten Ventures' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Molten Ventures this year. They also expect company revenue to perform worse 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 Molten Ventures after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Molten Ventures' financials, such as concerns around earnings quality. Learn more, and discover the 1 other risk we've identified, for free on our platform here.

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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.