Analysts Just Shaved Their SKP Resources Bhd (KLSE:SKPRES) Forecasts Dramatically

The latest analyst coverage could presage a bad day for SKP Resources Bhd (KLSE:SKPRES), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After the downgrade, the consensus from SKP Resources Bhd's seven analysts is for revenues of RM2.2b in 2024, which would reflect a chunky 15% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to descend 17% to RM0.076 in the same period. Prior to this update, the analysts had been forecasting revenues of RM2.7b and earnings per share (EPS) of RM0.10 in 2024. Indeed, we can see that the analysts are a lot more bearish about SKP Resources Bhd's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for SKP Resources Bhd

It'll come as no surprise then, to learn that the analysts have cut their price target 14% to RM1.37. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic SKP Resources Bhd analyst has a price target of RM2.00 per share, while the most pessimistic values it at RM0.95. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. We would highlight that sales are expected to reverse, with a forecast 15% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 7.8% 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 13% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - SKP Resources Bhd is expected to lag the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for SKP Resources Bhd. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that SKP Resources Bhd's revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

Still, 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 SKP Resources Bhd going out to 2026, and you can see them 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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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.