The latest analyst coverage could presage a bad day for Basic-Fit N.V. (AMS:BFIT), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
After the downgrade, the six analysts covering Basic-Fit are now predicting revenues of €457m in 2021. If met, this would reflect a sizeable 21% improvement in sales compared to the last 12 months. Losses are forecast to narrow 4.5% to €2.08 per share. Yet before this consensus update, the analysts had been forecasting revenues of €539m and losses of €0.80 per share in 2021. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
The consensus price target lifted 9.5% to €36.75, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer term. 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. Currently, the most bullish analyst values Basic-Fit at €45.00 per share, while the most bearish prices it at €25.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Basic-Fit shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Basic-Fit's past performance and to peers in the same industry. It's clear from the latest estimates that Basic-Fit's rate of growth is expected to accelerate meaningfully, with the forecast 21% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 16% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 16% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Basic-Fit is expected to grow much faster than its industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Basic-Fit. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of Basic-Fit.
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 Basic-Fit going out to 2025, and you can see them 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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