News Flash: One Favelle Favco Berhad (KLSE:FAVCO) Analyst Has Been Trimming Their Revenue Forecasts

One thing we could say about the covering analyst on Favelle Favco Berhad (KLSE:FAVCO) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

After the downgrade, the single analyst covering Favelle Favco Berhad is now predicting revenues of RM601m in 2022. If met, this would reflect a reasonable 3.6% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analyst was forecasting revenues of RM601m in 2022. It looks like the recent earnings updates confirmed that the business is performing in line with expectations, given there's been no meaningful changes in the new revenue estimates.

Check out our latest analysis for Favelle Favco Berhad

Notably, the analyst has cut their price target 9.3% to RM1.95, suggesting concerns around Favelle Favco Berhad's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Favelle Favco Berhad's past performance and to peers in the same industry. It's clear from the latest estimates that Favelle Favco Berhad's rate of growth is expected to accelerate meaningfully, with the forecast 3.6% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 2.9% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 14% annually. So it's clear that despite the acceleration in growth, Favelle Favco Berhad is expected to grow meaningfully slower than the industry average.

The Bottom Line

The clear take away from these updates is that the analyst made no change to their revenue estimates for this year, with the business apparently performing in line with their models. They also expect company revenue to perform worse than the wider market. The consensus price target fell measurably, with the analyst seemingly not reassured by recent business developments, leading to a lower estimate of Favelle Favco Berhad's future valuation. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Favelle Favco Berhad after today.

There might be good reason for analyst bearishness towards Favelle Favco Berhad, like dilutive stock issuance over the past year. Learn more, and discover the 2 other concerns we've identified, for 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.