These Analysts Just Made An Downgrade To Their Agile Group Holdings Limited (HKG:3383) EPS Forecasts

The latest analyst coverage could presage a bad day for Agile Group Holdings Limited (HKG:3383), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the ten analysts covering Agile Group Holdings are now predicting revenues of CN¥56b in 2023. If met, this would reflect a modest 3.3% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 96% to CN¥0.12. Previously, the analysts had been modelling revenues of CN¥64b and earnings per share (EPS) of CN¥0.91 in 2023. So we can see that the consensus has become notably more bearish on Agile Group Holdings' outlook with these numbers, making a measurable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

View our latest analysis for Agile Group Holdings

The consensus price target fell 7.7% to CN¥2.29, implicitly signalling that lower earnings per share are a leading indicator for Agile Group Holdings' valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Agile Group Holdings, with the most bullish analyst valuing it at CN¥4.17 and the most bearish at CN¥1.40 per share. 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. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the 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. It's pretty clear that there is an expectation that Agile Group Holdings' revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 3.3% growth on an annualised basis. This is compared to a historical growth rate of 5.9% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.8% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Agile Group Holdings.

The Bottom Line

The most important thing to take away is that analysts are expecting Agile Group Holdings to become unprofitable this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Agile Group Holdings.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Agile Group Holdings' financials, such as dilutive stock issuance over the past year. Learn more, and discover the 1 other flag we've identified, for 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.

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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.