Downgrade: Here's How This Analyst Sees Pecca Group Berhad (KLSE:PECCA) Performing In The Near Term

Market forces rained on the parade of Pecca Group Berhad (KLSE:PECCA) shareholders today, when the covering analyst downgraded their forecasts for this year. 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.

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Following the downgrade, the most recent consensus for Pecca Group Berhad from its single analyst is for revenues of RM246m in 2025 which, if met, would be a solid 8.9% increase on its sales over the past 12 months. Statutory earnings per share are anticipated to reduce 3.0% to RM0.078 in the same period. Previously, the analyst had been modelling revenues of RM281m and earnings per share (EPS) of RM0.094 in 2025. Indeed, we can see that the analyst is a lot more bearish about Pecca Group Berhad's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Pecca Group Berhad

The consensus price target fell 6.7% to RM1.68, with the weaker earnings outlook clearly leading analyst valuation estimates.

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 Pecca Group Berhad's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 8.9% growth on an annualised basis. This is compared to a historical growth rate of 18% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 10% annually. Factoring in the forecast slowdown in growth, it looks like Pecca Group Berhad is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of Pecca Group Berhad.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Pecca Group Berhad going out as far as 2027, 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 backed by insiders.

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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.