Analysts Just Made A Major Revision To Their Melco International Development Limited (HKG:200) Revenue Forecasts

One thing we could say about the analysts on Melco International Development Limited (HKG:200) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Surprisingly the share price has been buoyant, rising 15% to HK$10.36 in the past 7 days. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

After the downgrade, the consensus from Melco International Development's six analysts is for revenues of HK$11b in 2022, which would reflect an uneasy 15% decline in sales compared to the last year of performance. Prior to the latest estimates, the analysts were forecasting revenues of HK$15b in 2022. It looks like forecasts have become a fair bit less optimistic on Melco International Development, given the sizeable cut to revenue estimates.

View our latest analysis for Melco International Development

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One thing that stands out from these estimates is that revenues are expected to keep falling until the end of 2022, roughly in line with the historical decline of 23% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 32% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Melco International Development to suffer worse than 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 Melco International Development going forwards.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Melco International Development, including recent substantial insider selling. For more information, you can click here to discover this and the 2 other concerns we've identified.

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.