Palace Capital Plc (LON:PCA) Analysts Just Trimmed Their Revenue Forecasts By 26%

The analysts covering Palace Capital Plc (LON:PCA) 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 analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the consensus from Palace Capital's four analysts is for revenues of UK£17m in 2023, which would reflect a substantial 65% decline in sales compared to the last year of performance. Prior to the latest estimates, the analysts were forecasting revenues of UK£23m in 2023. It looks like forecasts have become a fair bit less optimistic on Palace Capital, given the pretty serious reduction to revenue estimates.

Check out our latest analysis for Palace Capital

We'd point out that there was no major changes to their price target of UK£3.45, suggesting the latest estimates were not enough to shift their view on the value of the business. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Palace Capital analyst has a price target of UK£3.64 per share, while the most pessimistic values it at UK£3.20. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 65% by the end of 2023. This indicates a significant reduction from annual growth of 21% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 0.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Palace Capital is expected to lag the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Palace Capital this year. They're also anticipating slower revenue growth than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Palace Capital going forwards.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Palace Capital's financials, such as a weak balance sheet. For more information, you can click here to discover this and the 3 other concerns we've identified.

You can also see our analysis of Palace Capital's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.