The latest analyst coverage could presage a bad day for Sogn Sparebank (OB:SOGN), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the downgrade, the consensus from solitary analyst covering Sogn Sparebank is for revenues of kr113m in 2021, implying a chunky 13% decline in sales compared to the last 12 months. Before the latest update, the analyst was foreseeing kr148m of revenue in 2021. The consensus view seems to have become more pessimistic on Sogn Sparebank, noting the sizeable cut to revenue estimates in this update.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 13%, a significant reduction from annual growth of 12% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.7% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Sogn Sparebank is expected to lag the wider industry.
The Bottom Line
The clear low-light was that the analyst slashing their revenue forecasts for Sogn Sparebank this year. They also expect company revenue to perform worse than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Sogn Sparebank after today.
As you can see, this analyst clearly isn't bullish, and there might be good reason for that. We've identified some potential issues with Sogn Sparebank's financials, such as concerns around earnings quality. Learn more, and discover the 2 other flags we've identified, for free on our platform here.
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