These Analysts Think Uzma Berhad's (KLSE:UZMA) Sales Are Under Threat

Today is shaping up negative for Uzma Berhad (KLSE:UZMA) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the four analysts covering Uzma Berhad are now predicting revenues of RM495m in 2021. If met, this would reflect a credible 7.4% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of RM563m in 2021. The consensus view seems to have become more pessimistic on Uzma Berhad, noting the measurable cut to revenue estimates in this update.

Check out our latest analysis for Uzma Berhad

There was no particular change to the consensus price target of RM0.91, with Uzma 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. There are some variant perceptions on Uzma Berhad, with the most bullish analyst valuing it at RM1.00 and the most bearish at RM0.74 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Uzma Berhad is an easy business to forecast or the underlying assumptions are obvious.

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. The analysts are definitely expecting Uzma Berhad's growth to accelerate, with the forecast 7.4% annualised growth to the end of 2021 ranking favourably alongside historical growth of 3.7% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 7.6% per year. Uzma Berhad is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. Analysts also expect revenues to grow approximately in line with 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 Uzma Berhad after today.

Want to learn more? We have estimates for Uzma Berhad from its four analysts out until 2023, 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. 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.
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