The Gabungan AQRS Berhad (KLSE:GBGAQRS) Analysts Have Been Trimming Their Sales Forecasts

One thing we could say about the analysts on Gabungan AQRS Berhad (KLSE:GBGAQRS) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. At RM0.66, shares are up 8.3% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After this downgrade, Gabungan AQRS Berhad's six analysts are now forecasting revenues of RM463m in 2021. This would be a substantial 141% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing RM531m of revenue in 2021. The consensus view seems to have become more pessimistic on Gabungan AQRS Berhad, noting the measurable cut to revenue estimates in this update.

See our latest analysis for Gabungan AQRS Berhad

There was no particular change to the consensus price target of RM0.91, with Gabungan AQRS Berhad's latest outlook seemingly not enough to result in a change of valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Gabungan AQRS Berhad analyst has a price target of RM1.04 per share, while the most pessimistic values it at RM0.74. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Gabungan AQRS Berhad's past performance and to peers in the same industry. The analysts are definitely expecting Gabungan AQRS Berhad's growth to accelerate, with the forecast 141% annualised growth to the end of 2021 ranking favourably alongside historical growth of 1.5% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Gabungan AQRS Berhad is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. The analysts also expect revenues to grow faster than the wider market. 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 Gabungan AQRS Berhad after today.

Want to learn more? At least one of Gabungan AQRS Berhad's six 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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