One Analyst Just Shaved Their Plant Health Care plc (LON:PHC) Forecasts Dramatically

Market forces rained on the parade of Plant Health Care plc (LON:PHC) shareholders today, when the covering analyst downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following this downgrade, Plant Health Care's solo analyst are forecasting 2023 revenues to be US$12m, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 52% to US$0.008 per share. However, before this estimates update, the consensus had been expecting revenues of US$16m and US$0.004 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Plant Health Care

There was no major change to the consensus price target of US$0.53, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Plant Health Care's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Plant Health Care's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 1.6% growth on an annualised basis. This is compared to a historical growth rate of 10% over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 5.8% annually. So it's clear that despite the slowdown in growth, Plant Health Care is still expected to grow meaningfully faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst increased their loss per share estimates for this year. Unfortunately, they also downgraded their revenue estimates, and our data indicates sales are expected to outperform the wider market. Even so, earnings per share are more important to the intrinsic value of the business. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Plant Health Care.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Plant Health Care going out as far as 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.