Need To Know: This Analyst Just Made A Substantial Cut To Their Esautomotion S.p.A. (BIT:ESAU) Estimates

Market forces rained on the parade of Esautomotion S.p.A. (BIT:ESAU) shareholders today, when the covering analyst downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following this downgrade, Esautomotion's single analyst are forecasting 2023 revenues to be €36m, approximately in line with the last 12 months. Statutory earnings per share are supposed to fall 13% to €0.43 in the same period. Prior to this update, the analyst had been forecasting revenues of €41m and earnings per share (EPS) of €0.50 in 2023. Indeed, we can see that the analyst is a lot more bearish about Esautomotion's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Esautomotion

It'll come as no surprise then, to learn that the analyst has cut their price target 9.0% to €8.10.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 1.4% by the end of 2023. This indicates a significant reduction from annual growth of 17% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.3% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Esautomotion is expected to lag the wider industry.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Esautomotion. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

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 Esautomotion going out as far as 2025, 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.

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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.