Downgrade: Here's How Analysts See Lotte Chemical Titan Holding Berhad (KLSE:LCTITAN) Performing In The Near Term

Today is shaping up negative for Lotte Chemical Titan Holding Berhad (KLSE:LCTITAN) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the four analysts covering Lotte Chemical Titan Holding Berhad, is for revenues of RM7.7b in 2023, which would reflect a perceptible 6.3% reduction in Lotte Chemical Titan Holding Berhad's sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 38% to RM0.33. However, before this estimates update, the consensus had been expecting revenues of RM8.7b and RM0.14 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Lotte Chemical Titan Holding Berhad

The consensus price target fell 5.1% to RM1.11, implicitly signalling that lower earnings per share are a leading indicator for Lotte Chemical Titan Holding Berhad's valuation. 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. There are some variant perceptions on Lotte Chemical Titan Holding Berhad, with the most bullish analyst valuing it at RM1.56 and the most bearish at RM0.86 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 6.3% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 2.6% 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 3.5% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Lotte Chemical Titan Holding Berhad is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Lotte Chemical Titan Holding Berhad.

After a downgrade like this one, it's pretty clear that previous forecasts were too optimistic. Worse, it's possible that the forecast future income could struggle to cover Lotte Chemical Titan Holding Berhad'sdividend payments. For more information, you can click here to learn more about our dividend analysis and the 1 potential concern we've identified.

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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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.