News Flash: 3 Analysts Think Innovatec S.p.A. (BIT:INC) Earnings Are Under Threat

The analysts covering Innovatec S.p.A. (BIT:INC) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, Innovatec's three analysts currently expect revenues in 2023 to be €288m, approximately in line with the last 12 months. Statutory earnings per share are presumed to increase 4.2% to €0.12. Prior to this update, the analysts had been forecasting revenues of €332m and earnings per share (EPS) of €0.17 in 2023. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

Check out our latest analysis for Innovatec

It'll come as no surprise then, to learn that the analysts have cut their price target 13% to €1.93.

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 0.7% by the end of 2023. This indicates a significant reduction from annual growth of 49% 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 4.7% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Innovatec is expected to lag the wider industry.

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. 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.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Innovatec's business, like concerns around earnings quality. For more information, you can click here to discover this and the 1 other flag we've identified.

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.