Analysts Just Made A Major Revision To Their Regional REIT Limited (LON:RGL) Revenue Forecasts

One thing we could say about the analysts on Regional REIT Limited (LON:RGL) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the latest downgrade, the three analysts covering Regional REIT provided consensus estimates of UK£72m revenue in 2022, which would reflect a not inconsiderable 19% decline on its sales over the past 12 months. Before the latest update, the analysts were foreseeing UK£91m of revenue in 2022. It looks like forecasts have become a fair bit less optimistic on Regional REIT, given the sizeable cut to revenue estimates.

See our latest analysis for Regional REIT

Notably, the analysts have cut their price target 12% to UK£0.82, suggesting concerns around Regional REIT's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Regional REIT analyst has a price target of UK£0.90 per share, while the most pessimistic values it at UK£0.75. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Regional REIT is an easy business to forecast or the underlying assumptions are obvious.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 34% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 6.7% 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 5.7% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Regional REIT is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Regional REIT's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Regional REIT after today.

Of course, there's always more to the story. We have estimates for Regional 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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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.