Analyst Forecasts Just Became More Bearish On Archosaur Games Inc. (HKG:9990)

Market forces rained on the parade of Archosaur Games Inc. (HKG:9990) shareholders today, when the analysts downgraded their 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 current consensus, from the three analysts covering Archosaur Games, is for revenues of CN¥642m in 2022, which would reflect a small 7.9% reduction in Archosaur Games' sales over the past 12 months. Before the latest update, the analysts were foreseeing CN¥880m of revenue in 2022. The consensus view seems to have become more pessimistic on Archosaur Games, noting the sizeable cut to revenue estimates in this update.

Check out our latest analysis for Archosaur Games

The consensus price target rose 20% to CN¥4.94, with the analysts clearly more optimistic about Archosaur Games' prospects following this update. 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. The most optimistic Archosaur Games analyst has a price target of CN¥8.02 per share, while the most pessimistic values it at CN¥3.94. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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 also point out that the forecast 15% annualised revenue decline to the end of 2022 is better than the historical trend, which saw revenues shrink 40% annually over the past year By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 20% per year. So while a broad number of companies are forecast to grow, unfortunately Archosaur Games is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Archosaur Games going forwards.

Thirsting for more data? We have estimates for Archosaur Games from its three analysts out until 2024, and you can see them 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.