NagaCorp Ltd. (HKG:3918) Analysts Just Slashed This Year's Revenue Estimates By 18%

Today is shaping up negative for NagaCorp Ltd. (HKG:3918) 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 latest consensus from NagaCorp's four analysts is for revenues of US$719m in 2023, which would reflect a sizeable 65% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$873m in 2023. The consensus view seems to have become more pessimistic on NagaCorp, noting the measurable cut to revenue estimates in this update.

View our latest analysis for NagaCorp

We'd point out that there was no major changes to their price target of US$1.01, suggesting the latest estimates were not enough to shift their view on the value of the business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values NagaCorp at US$10.22 per share, while the most bearish prices it at US$5.50. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that NagaCorp is forecast to grow faster in the future than it has in the past, with revenues expected to display 65% annualised growth until the end of 2023. If achieved, this would be a much better result than the 26% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 32% annually. So it looks like NagaCorp is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also forecasting more rapid revenue growth than the wider market. 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 NagaCorp after today.

But wait - there's more! We have estimates for NagaCorp from its four analysts out until 2025, 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.