One Italmobiliare S.p.A. (BIT:ITM) Analyst Just Cut Their EPS Forecasts

The analyst covering Italmobiliare S.p.A. (BIT:ITM) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the one analyst covering Italmobiliare, is for revenues of €423m in 2021, which would reflect a concerning 28% reduction in Italmobiliare's sales over the past 12 months. Statutory earnings per share are anticipated to crater 27% to €1.18 in the same period. Previously, the analyst had been modelling revenues of €583m and earnings per share (EPS) of €2.06 in 2021. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a large cut to earnings per share numbers as well.

See our latest analysis for Italmobiliare

The average price target climbed 12% to €39.00 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 28% by the end of 2021. This indicates a significant reduction from annual growth of 16% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Italmobiliare is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Italmobiliare's revenues are expected to grow slower than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of Italmobiliare.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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