Analysts Are More Bearish On Kerjaya Prospek Group Berhad (KLSE:KERJAYA) Than They Used To Be

One thing we could say about the analysts on Kerjaya Prospek Group Berhad (KLSE:KERJAYA) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. Shares are up 5.9% to RM0.99 in the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the downgrade, the latest consensus from Kerjaya Prospek Group Berhad's five analysts is for revenues of RM916m in 2020, which would reflect a notable 10% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to fall 13% to RM0.07 in the same period. Previously, the analysts had been modelling revenues of RM1.0b and earnings per share (EPS) of RM0.08 in 2020. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a considerable drop in earnings per share numbers as well.

Check out our latest analysis for Kerjaya Prospek Group Berhad

Analysts made no major changes to their price target of RM1.34, suggesting the downgrades are not expected to have a long-term impact on Kerjaya Prospek Group Berhad's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Kerjaya Prospek Group Berhad, with the most bullish analyst valuing it at RM1.43 and the most bearish at RM1.25 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Kerjaya Prospek Group Berhad's past performance and to peers in the same industry. We would highlight that Kerjaya Prospek Group Berhad's revenue growth is expected to slow, with forecast 10% increase next year well below the historical 20% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 12% next year. Factoring in the forecast slowdown in growth, it looks like Kerjaya Prospek 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 analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Kerjaya Prospek Group Berhad after the downgrade.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Kerjaya Prospek Group Berhad going out to 2022, 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 that insiders are buying.

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