Analysts Just Made A Major Revision To Their UOA Development Bhd (KLSE:UOADEV) Revenue Forecasts

The latest analyst coverage could presage a bad day for UOA Development Bhd (KLSE:UOADEV), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the latest consensus from UOA Development Bhd's five analysts is for revenues of RM534m in 2022, which would reflect a decent 16% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to fall 16% to RM0.077 in the same period. Before this latest update, the analysts had been forecasting revenues of RM624m and earnings per share (EPS) of RM0.082 in 2022. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a small dip in EPS estimates to boot.

See our latest analysis for UOA Development Bhd

Despite the cuts to forecast earnings, there was no real change to the RM1.74 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. There are some variant perceptions on UOA Development Bhd, with the most bullish analyst valuing it at RM2.00 and the most bearish at RM1.62 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

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. For example, we noticed that UOA Development Bhd's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 16% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 12% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 8.5% annually. Not only are UOA Development Bhd'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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than 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 UOA Development Bhd after today.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with UOA Development Bhd's business, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 1 other flag we've identified.

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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.