Today is shaping up negative for Seco S.p.A. (BIT:IOT) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the downgrade, the most recent consensus for Seco from its four analysts is for revenues of €258m in 2024 which, if met, would be a meaningful 17% increase on its sales over the past 12 months. Statutory earnings per share are presumed to surge 83% to €0.16. Before this latest update, the analysts had been forecasting revenues of €299m and earnings per share (EPS) of €0.22 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.
See our latest analysis for Seco
It'll come as no surprise then, to learn that the analysts have cut their price target 14% to €6.30.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Seco's past performance and to peers in the same industry. We would highlight that Seco's revenue growth is expected to slow, with the forecast 14% annualised growth rate until the end of 2024 being well below the historical 32% p.a. growth over the last five years. Compare this to the 7 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 14% per year. Factoring in the forecast slowdown in growth, it looks like Seco is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Seco. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. With a serious cut to next year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Seco.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Seco analysts - going out to 2025, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.
About BIT:IOT
Excellent balance sheet with reasonable growth potential.
