Some Analysts Just Cut Their Max Financial Services Limited (NSE:MFSL) Estimates

The latest analyst coverage could presage a bad day for Max Financial Services Limited (NSE:MFSL), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. The stock price has risen 4.4% to ₹849 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.

After the downgrade, the eleven analysts covering Max Financial Services are now predicting revenues of ₹335b in 2023. If met, this would reflect an okay 7.5% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing ₹362b of revenue in 2023. It looks like the analysts have become a bit less bullish on Max Financial Services, given the modest decline in revenue estimates after the latest consensus updates.

Check out our latest analysis for Max Financial Services

There was no particular change to the consensus price target of ₹1,037, with Max Financial Services' latest outlook seemingly not enough to result in a change of valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Max Financial Services analyst has a price target of ₹1,325 per share, while the most pessimistic values it at ₹835. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Max Financial Services' revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 10% growth on an annualised basis. This is compared to a historical growth rate of 21% over the past three years. Compare this to the 10 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 11% per year. Factoring in the forecast slowdown in growth, it looks like Max Financial Services is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Max Financial Services this year. The analysts also expect revenues to grow approximately in line with the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Max Financial Services after today.

Unsatisfied? At least one of Max Financial Services' eleven analysts has provided estimates out to 2025, which can be seen 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.

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.