Analyst Forecasts Just Became More Bearish On Revenue Group Berhad (KLSE:REVENUE)

The latest analyst coverage could presage a bad day for Revenue Group Berhad (KLSE:REVENUE), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the consensus from Revenue Group Berhad's two analysts is for revenues of RM92m in 2023, which would reflect a perceptible 3.0% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing RM106m of revenue in 2023. It looks like forecasts have become a fair bit less optimistic on Revenue Group Berhad, given the substantial drop in revenue estimates.

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Notably, the analysts have cut their price target 39% to RM0.82, suggesting concerns around Revenue Group Berhad's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Revenue Group Berhad at RM1.05 per share, while the most bearish prices it at RM0.80. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 3.0% by the end of 2023. This indicates a significant reduction from annual growth of 24% 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 8.4% per year. It's pretty clear that Revenue Group 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 Revenue Group Berhad this year. They also expect company revenue to perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Revenue Group Berhad's future valuation. 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 Revenue Group Berhad after today.

Need some more information? At least one of Revenue Group Berhad's two analysts has provided estimates out to 2025, which can be seen for 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 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.