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

The latest analyst coverage could presage a bad day for SBM Offshore N.V. (AMS:SBMO), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

After this downgrade, SBM Offshore's four analysts are now forecasting revenues of US$4.9b in 2025. This would be an okay 3.4% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to crater 24% to US$1.84 in the same period. Prior to this update, the analysts had been forecasting revenues of US$5.8b and earnings per share (EPS) of US$1.90 in 2025. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a small dip in EPS estimates to boot.

Check out our latest analysis for SBM Offshore

Despite the cuts to forecast earnings, there was no real change to the US$25.23 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic SBM Offshore analyst has a price target of US$26.44 per share, while the most pessimistic values it at US$23.21. This is a very narrow spread of estimates, implying either that SBM Offshore is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that SBM Offshore's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 2.7% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.0% annually. So it's pretty clear that, while SBM Offshore's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of SBM Offshore going forwards.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple SBM Offshore analysts - 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 backed by insiders.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.