Analyst Forecasts Just Became More Bearish On Otovo ASA (OB:OTOVO)

Today is shaping up negative for Otovo ASA (OB:OTOVO) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. At kr1.39, shares are up 5.1% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the latest downgrade, the current consensus, from the four analysts covering Otovo, is for revenues of kr829m in 2024, which would reflect a measurable 7.0% reduction in Otovo's sales over the past 12 months. Losses are forecast to hold steady at around kr1.47 per share. However, before this estimates update, the consensus had been expecting revenues of kr924m and kr1.41 per share in losses. 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.

View our latest analysis for Otovo

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Otovo's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 9.2% by the end of 2024. This indicates a significant reduction from annual growth of 45% 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 6.5% annually for the foreseeable future. It's pretty clear that Otovo's revenues are expected to perform substantially worse than the wider 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 Otovo. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Otovo's revenues are expected to grow slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Otovo after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Otovo's financials, such as major dilution from new stock issuance in the past year. For more information, you can click here to discover this and the 3 other warning signs we've identified.

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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