Stock Analysis

Some Seri Industrial S.p.A. (BIT:SERI) Analysts Just Made A Major Cut To Next Year's Estimates

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BIT:SERI
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The analysts covering Seri Industrial S.p.A. (BIT:SERI) 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) forecasts went under the knife, suggesting analysts have soured majorly on the business. Surprisingly the share price has been buoyant, rising 12% to €4.77 in the past 7 days. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

Following the downgrade, the latest consensus from Seri Industrial's dual analysts is for revenues of €261m in 2023, which would reflect a substantial 40% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 63% to €0.03 per share. Before this latest update, the analysts had been forecasting revenues of €308m and earnings per share (EPS) of €0.34 in 2023. So we can see that the consensus has become notably more bearish on Seri Industrial's outlook with these numbers, making a measurable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

Check out our latest analysis for Seri Industrial

earnings-and-revenue-growth
BIT:SERI Earnings and Revenue Growth July 14th 2023

The consensus price target fell 9.8% to €9.65, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Seri Industrial, with the most bullish analyst valuing it at €9.80 and the most bearish at €9.50 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Seri Industrial's growth to accelerate, with the forecast 40% annualised growth to the end of 2023 ranking favourably alongside historical growth of 12% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.5% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Seri Industrial is expected to grow much faster than its industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Seri Industrial dropped from profits to a loss this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Seri Industrial.

That said, the analysts might have good reason to be negative on Seri Industrial, given a short cash runway. For more information, you can click here to discover this and the 1 other warning sign 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.

Valuation is complex, but we're helping make it simple.

Find out whether Seri Industrial is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.

About BIT:SERI

Seri Industrial

Seri Industrial S.p.A., through its subsidiaries, engages in the production and recycling of plastic materials for the electric accumulators, automotive, hydro-thermo-sanitary, civil, and shipbuilding markets.

High growth potential and slightly overvalued.