Need To Know: The Consensus Just Cut Its John Wood Group PLC (LON:WG.) Estimates For 2022

Today is shaping up negative for John Wood Group PLC (LON:WG.) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the consensus from six analysts covering John Wood Group is for revenues of US$5.4b in 2022, implying a considerable 15% decline in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$6.6b of revenue in 2022. The consensus view seems to have become more pessimistic on John Wood Group, noting the measurable cut to revenue estimates in this update.

See our latest analysis for John Wood Group

There was no particular change to the consensus price target of US$3.10, with John Wood Group's latest outlook seemingly not enough to result in a change of 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. Currently, the most bullish analyst values John Wood Group at US$3.28 per share, while the most bearish prices it at US$1.52. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the John Wood Group's past performance and to peers in the same industry. Over the past five years, revenues have declined around 0.01% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 27% decline in revenue until the end of 2022. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 11% annually. So while a broad number of companies are forecast to grow, unfortunately John Wood Group is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth 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 John Wood Group after today.

Thirsting for more data? We have estimates for John Wood Group from its six analysts out until 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.