Analysts Have Been Trimming Their PETRONAS Chemicals Group Berhad (KLSE:PCHEM) Price Target After Its Latest Report

It's been a mediocre week for PETRONAS Chemicals Group Berhad (KLSE:PCHEM) shareholders, with the stock dropping 14% to RM3.32 in the week since its latest quarterly results. Results were overall in line with expectations, with the company breaking even at the statutory earnings per share (EPS) level on RM7.7b in revenue. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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Taking into account the latest results, the consensus forecast from PETRONAS Chemicals Group Berhad's 18 analysts is for revenues of RM31.7b in 2025. This reflects a reasonable 2.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 179% to RM0.17. Yet prior to the latest earnings, the analysts had been anticipated revenues of RM31.9b and earnings per share (EPS) of RM0.21 in 2025. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.

View our latest analysis for PETRONAS Chemicals Group Berhad

It might be a surprise to learn that the consensus price target fell 8.8% to RM3.68, with the analysts clearly linking lower forecast earnings to the performance of the stock price. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values PETRONAS Chemicals Group Berhad at RM6.00 per share, while the most bearish prices it at RM2.50. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that PETRONAS Chemicals Group Berhad's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 3.9% growth on an annualised basis. This is compared to a historical growth rate of 16% over the past five years. Compare this to the 28 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 3.5% per year. Factoring in the forecast slowdown in growth, it looks like PETRONAS Chemicals 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 the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of PETRONAS Chemicals Group Berhad's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for PETRONAS Chemicals Group Berhad going out to 2027, and you can see them free on our platform here..

Before you take the next step you should know about the 2 warning signs for PETRONAS Chemicals Group Berhad that we have uncovered.

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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.