Aeffe S.p.A.'s (BIT:AEF) Analyst Just Slashed Next Year's Estimates

The latest analyst coverage could presage a bad day for Aeffe S.p.A. (BIT:AEF), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

Following the downgrade, the consensus from one analyst covering Aeffe is for revenues of €320m in 2024, implying a discernible 5.6% decline in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 50% to €0.16 per share. Yet before this consensus update, the analyst had been forecasting revenues of €366m and losses of €0.04 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Aeffe

The consensus price target fell 22% to €0.90, implicitly signalling that lower earnings per share are a leading indicator for Aeffe's valuation.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 4.5% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 0.2% 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 8.5% per year. It's pretty clear that Aeffe's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Aeffe. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of Aeffe.

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