Need To Know: Analysts Just Made A Substantial Cut To Their Aegon N.V. (AMS:AGN) Estimates

One thing we could say about the analysts on Aegon N.V. (AMS:AGN) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the latest downgrade, the current consensus, from the ten analysts covering Aegon, is for revenues of €14b in 2022, which would reflect a concerning 57% reduction in Aegon's sales over the past 12 months. Statutory earnings per share are supposed to fall 15% to €0.68 in the same period. Before this latest update, the analysts had been forecasting revenues of €21b and earnings per share (EPS) of €0.80 in 2022. Indeed, we can see that the analysts are a lot more bearish about Aegon's prospects, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Aegon

Despite the cuts to forecast earnings, there was no real change to the €5.25 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Aegon, with the most bullish analyst valuing it at €6.50 and the most bearish at €3.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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 67% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 1.9% 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 1.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Aegon 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 Aegon. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Aegon'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 Aegon.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Aegon going out to 2024, 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.