Downgrade: Here's How This Analyst Sees Bonhill Group Plc (LON:BONH) Performing In The Near Term

Market forces rained on the parade of Bonhill Group Plc (LON:BONH) 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, Bonhill Group's sole analyst are forecasting 2021 revenues to be UK£17m, approximately in line with the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 58% to UK£0.014. Yet before this consensus update, the analyst had been forecasting revenues of UK£19m and losses of UK£0.012 per share in 2021. Ergo, there's been a clear change in sentiment, with the analyst administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Bonhill Group

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 1.8% by the end of 2021. This indicates a significant reduction from annual growth of 41% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 10% per year. It's pretty clear that Bonhill Group's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Bonhill Group. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Bonhill Group's revenues are expected to grow slower than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like the analyst has become a lot more bearish on Bonhill Group, and their negativity could be grounds for caution.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2023, which can be seen for 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 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.