Analysts Just Made A Major Revision To Their Lemon Tree Hotels Limited (NSE:LEMONTREE) Revenue Forecasts

Today is shaping up negative for Lemon Tree Hotels Limited (NSE:LEMONTREE) 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. The stock price has risen 7.9% to ₹32.20 over the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the consensus from eleven analysts covering Lemon Tree Hotels is for revenues of ₹3.2b in 2021, implying a sizeable 31% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of ₹3.8b in 2021. The consensus view seems to have become more pessimistic on Lemon Tree Hotels, noting the measurable cut to revenue estimates in this update.

See our latest analysis for Lemon Tree Hotels

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 more thing stood out to us about these estimates, and it's the idea that Lemon Tree Hotels'decline is expected to accelerate, with revenues forecast to fall 31% next year, topping off a historical decline of 21% a year 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 28% per year. So while a broad number of companies are forecast to grow, unfortunately Lemon Tree Hotels 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 also expect company revenue to perform worse 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 Lemon Tree Hotels after today.

Unanswered questions? We have estimates for Lemon Tree Hotels from its eleven analysts out until 2023, and you can see them free on our platform here.

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