One Advancecon Holdings Berhad (KLSE:ADVCON) Analyst Just Made A Major Cut To Next Year's Estimates

The latest analyst coverage could presage a bad day for Advancecon Holdings Berhad (KLSE:ADVCON), 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. The stock price has risen 5.6% to RM0.38 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the downgrade, the most recent consensus for Advancecon Holdings Berhad from its solitary analyst is for revenues of RM264m in 2021 which, if met, would be a satisfactory 6.0% increase on its sales over the past 12 months. Per-share earnings are expected to leap 700% to RM0.02. Before this latest update, the analyst had been forecasting revenues of RM323m and earnings per share (EPS) of RM0.03 in 2021. Indeed, we can see that the analyst is a lot more bearish about Advancecon Holdings Berhad's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Advancecon Holdings Berhad

It'll come as no surprise then, to learn that the analyst has cut their price target 15% to RM0.46.

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. One thing stands out from these estimates, which is that Advancecon Holdings Berhad is forecast to grow faster in the future than it has in the past, with revenues expected to display 6.0% annualised growth until the end of 2021. If achieved, this would be a much better result than the 1.8% annual decline over the past three years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 11% annually for the foreseeable future. Although Advancecon Holdings Berhad's revenues are expected to improve, it seems that the analyst is still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Advancecon Holdings Berhad. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Advancecon Holdings Berhad's revenues are expected to grow 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 Advancecon Holdings Berhad.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Advancecon Holdings Berhad, including its declining profit margins. Learn more, and discover the 3 other concerns we've identified, for free on our platform here.

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