Things Look Grim For British American Tobacco (Malaysia) Berhad (KLSE:BAT) After Today's Downgrade

One thing we could say about the analysts on British American Tobacco (Malaysia) Berhad (KLSE:BAT) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

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After this downgrade, British American Tobacco (Malaysia) Berhad's three analysts are now forecasting revenues of RM1.8b in 2025. This would be a huge 201% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to be RM0.46, roughly flat on the last 12 months. Prior to this update, the analysts had been forecasting revenues of RM2.2b and earnings per share (EPS) of RM0.54 in 2025. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a real cut to earnings per share numbers as well.

Check out our latest analysis for British American Tobacco (Malaysia) Berhad

The consensus price target fell 12% to RM5.07, with the weaker earnings outlook clearly leading analyst valuation estimates.

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. One thing stands out from these estimates, which is that British American Tobacco (Malaysia) Berhad is forecast to grow faster in the future than it has in the past, with revenues expected to display 201% annualised growth until the end of 2025. If achieved, this would be a much better result than the 4.5% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 6.6% per year. Not only are British American Tobacco (Malaysia) Berhad's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than 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. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of British American Tobacco (Malaysia) Berhad.

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 British American Tobacco (Malaysia) Berhad going out to 2027, 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 with high insider ownership.

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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.