Newsflash: ZOO Digital Group plc (LON:ZOO) Analysts Have Been Trimming Their Revenue Forecasts

The analysts covering ZOO Digital Group plc (LON:ZOO) 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 the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the four analysts covering ZOO Digital Group provided consensus estimates of US$38m revenue in 2024, which would reflect a painful 37% decline on its sales over the past 12 months. Before the latest update, the analysts were foreseeing US$40m of revenue in 2024. The forecasts seem less optimistic overall, with the modest decline in revenue estimates in the latest consensus update.

See our latest analysis for ZOO Digital Group

The consensus price target fell 21% to UK£0.69, with the analysts clearly less optimistic about ZOO Digital Group's valuation following this update.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 37% by the end of 2024. This indicates a significant reduction from annual growth of 27% 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 8.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - ZOO Digital Group 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. 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. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of ZOO Digital Group going forwards.

That said, the analysts might have good reason to be negative on ZOO Digital Group, given dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other risks we've identified.

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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.