These Analysts Think Seri Industrial S.p.A.'s (BIT:SERI) Earnings Are Under Threat

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.

Following the downgrade, the latest consensus from Seri Industrial's two analysts is for revenues of €210m in 2022, which would reflect a solid 17% improvement in sales compared to the last 12 months. Losses are supposed to balloon 76% to €0.093 per share. Prior to this update, the analysts had been forecasting revenues of €263m and earnings per share (EPS) of €0.10 in 2022. So we can see that the consensus has become notably more bearish on Seri Industrial's outlook with these numbers, making a sizeable 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

The consensus price target fell 12% to €11.00, implicitly signalling that lower earnings per share are a leading indicator for Seri Industrial's valuation. 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. The most optimistic Seri Industrial analyst has a price target of €12.20 per share, while the most pessimistic values it at €9.80. 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.

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. The analysts are definitely expecting Seri Industrial's growth to accelerate, with the forecast 36% annualised growth to the end of 2022 ranking favourably alongside historical growth of 19% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.9% 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 most important thing to take away is that analysts are expecting Seri Industrial to become unprofitable this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Seri Industrial.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Seri Industrial 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.

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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.