The analysts covering The PRS REIT plc (LON:PRSR) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
After this downgrade, PRS REIT's three analysts are now forecasting revenues of UK£24m in 2021. This would be a sizeable 88% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£28m in 2021. It looks like forecasts have become a fair bit less optimistic on PRS REIT, given the substantial drop in revenue estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the PRS REIT's past performance and to peers in the same industry. We would highlight that PRS REIT's revenue growth is expected to slow, with forecast 88% increase next year well below the historical 116% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.0% next year. Even after the forecast slowdown in growth, it seems obvious that PRS REIT is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. The analysts also expect revenues to grow faster 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 PRS REIT after today.
Unanswered questions? We have estimates for PRS REIT from its three analysts out until 2024, 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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