Today is shaping up negative for Made.com Group Plc (LON:MADE) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. 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 current consensus from Made.com Group's five analysts is for revenues of UK£418m in 2022 which - if met - would reflect a notable 12% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing UK£471m of revenue in 2022. It looks like forecasts have become a fair bit less optimistic on Made.com Group, given the substantial drop in revenue estimates.
Notably, the analysts have cut their price target 15% to UK£1.26, suggesting concerns around Made.com Group's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Made.com Group at UK£2.30 per share, while the most bearish prices it at UK£0.90. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Made.com Group's revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2022 being well below the historical 23% p.a. growth over the last three years. Compare this to the 19 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 14% per year. Factoring in the forecast slowdown in growth, it looks like Made.com Group is forecast to grow at about the same rate as 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 forecasting for revenues to grow at about the same rate as companies in the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. 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 Made.com Group after today.
Looking for more information? We have estimates for Made.com Group from its five analysts out until 2024, and you can see them free on our platform here.
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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.