The Eastern & Oriental Berhad (KLSE:E&O) Analysts Have Been Trimming Their Sales Forecasts

The analysts covering Eastern & Oriental Berhad (KLSE:E&O) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the six analysts covering Eastern & Oriental Berhad provided consensus estimates of RM260m revenue in 2021, which would reflect a substantial 25% decline on its sales over the past 12 months. Before the latest update, the analysts were foreseeing RM372m of revenue in 2021. It looks like forecasts have become a fair bit less optimistic on Eastern & Oriental Berhad, given the sizeable cut to revenue estimates.

View our latest analysis for Eastern & Oriental Berhad

There was no particular change to the consensus price target of RM0.45, with Eastern & Oriental Berhad's latest outlook seemingly not enough to result in a change of valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Eastern & Oriental Berhad analyst has a price target of RM0.55 per share, while the most pessimistic values it at RM0.37. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 25% by the end of 2021. This indicates a significant reduction from annual growth of 4.0% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 11% annually for the foreseeable future. It's pretty clear that Eastern & Oriental Berhad's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Eastern & Oriental Berhad this year. They also expect company revenue to perform worse than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Eastern & Oriental Berhad going forwards.

Thirsting for more data? At least one of Eastern & Oriental Berhad's six analysts has provided estimates out to 2023, which can be seen for free on our platform here.

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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