Time To Worry? Analysts Are Downgrading Their SBM Offshore N.V. (AMS:SBMO) Outlook

Market forces rained on the parade of SBM Offshore N.V. (AMS:SBMO) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. Investors however, have been notably more optimistic about SBM Offshore recently, with the stock price up a worthy 17% to €20.94 in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the latest downgrade, the current consensus, from the four analysts covering SBM Offshore, is for revenues of US$4.0b in 2025, which would reflect a considerable 15% reduction in SBM Offshore's sales over the past 12 months. Statutory earnings per share are presumed to soar 48% to US$1.27. Before this latest update, the analysts had been forecasting revenues of US$4.9b and earnings per share (EPS) of US$1.61 in 2025. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.

View our latest analysis for SBM Offshore

Despite the cuts to forecast earnings, there was no real change to the US$25.44 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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 SBM Offshore analyst has a price target of US$26.26 per share, while the most pessimistic values it at US$23.21. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 15% annualised revenue decline to the end of 2025. That is a notable change from historical growth of 9.1% 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 2.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - SBM Offshore 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 SBM Offshore. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that SBM Offshore's revenues are expected to grow slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of SBM Offshore.

There might be good reason for analyst bearishness towards SBM Offshore, like recent substantial insider selling. Learn more, and discover the 3 other concerns 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 with high insider ownership.

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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.