Downgrade: Here's How This Analyst Sees Kobay Technology Bhd. (KLSE:KOBAY) Performing In The Near Term

The latest analyst coverage could presage a bad day for Kobay Technology Bhd. (KLSE:KOBAY), 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) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

After the downgrade, the consensus from Kobay Technology Bhd's lone analyst is for revenues of RM338m in 2023, which would reflect a discernible 8.0% decline in sales compared to the last year of performance. Statutory earnings per share are presumed to increase 6.3% to RM0.15. Before this latest update, the analyst had been forecasting revenues of RM474m and earnings per share (EPS) of RM0.19 in 2023. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a considerable drop in earnings per share numbers as well.

See our latest analysis for Kobay Technology Bhd

The consensus price target fell 11% to RM3.65, with the weaker earnings outlook clearly leading analyst valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Kobay Technology Bhd analyst has a price target of RM4.00 per share, while the most pessimistic values it at RM3.29. Still, with such a tight range of estimates, it suggests the analyst has a pretty good idea of what they think the company is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 8.0% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 18% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 14% per year. It's pretty clear that Kobay Technology Bhd's revenues are expected to perform substantially worse than the wider 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 Kobay Technology Bhd. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Kobay Technology Bhd'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 Kobay Technology Bhd.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Kobay Technology Bhd going out as far as 2025, and you can see them 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.