These Analysts Just Made An Downgrade To Their Tremor International Ltd (LON:TRMR) EPS Forecasts

The latest analyst coverage could presage a bad day for Tremor International Ltd (LON:TRMR), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

After this downgrade, Tremor International's four analysts are now forecasting revenues of US$342m in 2023. This would be a credible 2.3% improvement in sales compared to the last 12 months. Per-share losses are expected to see a sharp uptick, reaching US$0.15. Previously, the analysts had been modelling revenues of US$419m and earnings per share (EPS) of US$0.18 in 2023. There looks to have been a major change in sentiment regarding Tremor International's prospects, with a substantial drop in revenues and the analysts now forecasting a loss instead of a profit.

See our latest analysis for Tremor International

The consensus price target fell 23% to US$11.18, implicitly signalling that lower earnings per share are a leading indicator for Tremor International's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Tremor International analyst has a price target of US$12.80 per share, while the most pessimistic values it at US$8.00. 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 Tremor International's past performance and to peers in the same industry. The period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 4.6% growth on an annualised basis. That is in line with its 4.5% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 4.5% per year. It's clear that while Tremor International's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The most important thing to take away is that analysts are expecting Tremor International to become unprofitable this year. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Tremor International.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Tremor International analysts - going out to 2024, 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 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.