The analysts covering Italian Exhibition Group S.p.A. (BIT:IEG) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
After the downgrade, the consensus from Italian Exhibition Group's three analysts is for revenues of €78m in 2021, which would reflect a concerning 33% decline in sales compared to the last year of performance. Prior to the latest estimates, the analysts were forecasting revenues of €90m in 2021. It looks like forecasts have become a fair bit less optimistic on Italian Exhibition Group, given the substantial drop in revenue estimates.
There was no particular change to the consensus price target of €3.33, with Italian Exhibition Group's latest outlook seemingly not enough to result in a change of valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Italian Exhibition Group, with the most bullish analyst valuing it at €3.50 and the most bearish at €3.10 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.
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. We would highlight that sales are expected to reverse, with a forecast 28% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 12% 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 3.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Italian Exhibition Group is expected to lag the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Italian Exhibition Group next year. They also expect company revenue to perform worse than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Italian Exhibition Group after today.
Want more information? At least one of Italian Exhibition Group's three analysts has provided estimates out to 2023, 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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