What You Need To Know About The OCK Group Berhad (KLSE:OCK) Analyst Downgrade Today

Today is shaping up negative for OCK Group Berhad (KLSE:OCK) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following this downgrade, OCK Group Berhad's two analysts are forecasting 2021 revenues to be RM480m, approximately in line with the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of RM534m in 2021. It looks like forecasts have become a fair bit less optimistic on OCK Group Berhad, given the measurable cut to revenue estimates.

View our latest analysis for OCK Group Berhad

There was no particular change to the consensus price target of RM0.53, with OCK Group Berhad's latest outlook seemingly not enough to result in a change of 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. The most optimistic OCK Group Berhad analyst has a price target of RM0.58 per share, while the most pessimistic values it at RM0.50. This is a very narrow spread of estimates, implying either that OCK Group Berhad is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. We would highlight that sales are expected to reverse, with a forecast 1.5% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 2.5% 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 3.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - OCK Group Berhad is expected to lag the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for OCK Group 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 OCK Group Berhad going forwards.

That said, the analysts might have good reason to be negative on OCK Group Berhad, given dilutive stock issuance over the past year. Learn more, and discover the 1 other warning sign we've identified, 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.

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.

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