Analysts Just Made A Major Revision To Their Shaftesbury PLC (LON:SHB) Revenue Forecasts

The latest analyst coverage could presage a bad day for Shaftesbury PLC (LON:SHB), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the consensus from six analysts covering Shaftesbury is for revenues of UK£95m in 2021, implying a sizeable 24% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£119m in 2021. It looks like forecasts have become a fair bit less optimistic on Shaftesbury, given the sizeable cut to revenue estimates.

Check out our latest analysis for Shaftesbury

There was no particular change to the consensus price target of UK£5.65, with Shaftesbury's latest outlook seemingly not enough to result in a change of 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. Currently, the most bullish analyst values Shaftesbury at UK£9.00 per share, while the most bearish prices it at UK£4.67. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. We would highlight that sales are expected to reverse, with the forecast 24% revenue decline a notable change from historical growth of 5.2% 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 6.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Shaftesbury 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 also expect company revenue to perform worse than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Shaftesbury going forwards.

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 Shaftesbury's business, like dilutive stock issuance over the past year. Learn more, and discover the 1 other warning sign we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.
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