Stock Analysis

One Tecma Solutions S.p.A. (BIT:TCM) Analyst Is Reducing Their Forecasts For This Year

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The latest analyst coverage could presage a bad day for Tecma Solutions S.p.A. (BIT:TCM), 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) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

After this downgrade, Tecma Solutions' solo analyst is now forecasting revenues of €17m in 2023. This would be a meaningful 19% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching €0.90 per share. Yet before this consensus update, the analyst had been forecasting revenues of €30m and losses of €0.31 per share in 2023. Ergo, there's been a clear change in sentiment, with the analyst administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Tecma Solutions

BIT:TCM Earnings and Revenue Growth March 26th 2023

The consensus price target fell 17% to €10.00, with the analyst clearly concerned about the company following the weaker revenue and earnings outlook.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Tecma Solutions' revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 19% growth on an annualised basis. This is compared to a historical growth rate of 47% over the past year. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 5.4% annually. Factoring in the forecast slowdown in growth, it's pretty clear that Tecma Solutions is still expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst increased their loss per share estimates for this year. Unfortunately, they also downgraded their revenue estimates, and our data indicates sales are expected to outperform the wider market. Even so, earnings per share are more important to the intrinsic value of the business. 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 Tecma Solutions.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2025, which can be seen for 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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Find out whether Tecma Solutions 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.