Some Purplebricks Group plc (LON:PURP) Analysts Just Made A Major Cut To Next Year's Estimates

The latest analyst coverage could presage a bad day for Purplebricks Group plc (LON:PURP), 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) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Bidders are definitely seeing a different story, with the stock price of UK£0.083 reflecting a 10% rise in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

After the downgrade, the consensus from Purplebricks Group's three analysts is for revenues of UK£60m in 2023, which would reflect a measurable 4.9% decline in sales compared to the last year of performance. The loss per share is anticipated to greatly reduce in the near future, narrowing 29% to UK£0.084. However, before this estimates update, the consensus had been expecting revenues of UK£70m and UK£0.056 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

View our latest analysis for Purplebricks Group

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. Over the past five years, revenues have declined around 5.0% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 9.6% decline in revenue until the end of 2023. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to decline 7.3% annually. So it's pretty clear that Purplebricks Group sales are expected to decline at a faster rate than the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Purplebricks Group revenue is expected to perform worse than the wider market. After a cut like that, investors could be forgiven for thinking analysts are a lot more bearish on Purplebricks Group, and a few readers might choose to steer clear of the stock.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Purplebricks Group going out to 2025, 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.