Newsflash: CLS Holdings plc (LON:CLI) Analysts Have Been Trimming Their Revenue Forecasts

The analysts covering CLS Holdings plc (LON:CLI) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the current consensus, from the dual analysts covering CLS Holdings, is for revenues of UK£113m in 2021, which would reflect a not inconsiderable 19% reduction in CLS Holdings' sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£140m in 2021. It looks like forecasts have become a fair bit less optimistic on CLS Holdings, given the measurable cut to revenue estimates.

Check out our latest analysis for CLS Holdings

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the CLS Holdings' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 19% by the end of 2021. This indicates a significant reduction from annual growth of 3.5% 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 0.3% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - CLS Holdings is expected to lag the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for CLS Holdings 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 CLS Holdings after today.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with CLS Holdings' business, like its declining profit margins. Learn more, and discover the 3 other concerns we've identified, for 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.

If you decide to trade CLS Holdings, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.