Analyst Forecasts Just Became More Bearish On Banca Sistema S.p.A. (BIT:BST)

Today is shaping up negative for Banca Sistema S.p.A. (BIT:BST) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the two analysts covering Banca Sistema are now predicting revenues of €104m in 2023. If met, this would reflect a reasonable 6.8% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to reduce 4.8% to €0.26 in the same period. Prior to this update, the analysts had been forecasting revenues of €117m and earnings per share (EPS) of €0.28 in 2023. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a small dip in EPS estimates to boot.

View our latest analysis for Banca Sistema

It'll come as no surprise then, to learn that the analysts have cut their price target 7.2% to €1.92. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Banca Sistema analyst has a price target of €1.97 per share, while the most pessimistic values it at €1.90. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Banca Sistema's rate of growth is expected to accelerate meaningfully, with the forecast 6.8% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 5.3% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.3% annually. Banca Sistema is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Banca Sistema's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Banca Sistema going forwards.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Banca Sistema going out as far as 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.