Otovo ASA (OB:OTOVO) Just Reported, And Analysts Assigned A kr3.90 Price Target

It's been a mediocre week for Otovo ASA (OB:OTOVO) shareholders, with the stock dropping 13% to kr2.09 in the week since its latest yearly results. It was a pretty bad result overall; while revenues were in line with expectations at kr1.1b, statutory losses exploded to kr2.70 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Otovo

After the latest results, the consensus from Otovo's four analysts is for revenues of kr994.6m in 2024, which would reflect a definite 9.0% decline in revenue compared to the last year of performance. Per-share losses are predicted to creep up to kr1.43. Yet prior to the latest earnings, the analysts had been forecasting revenues of kr1.44b and losses of kr1.75 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue forecasts while also reducing the estimated losses the business will incur.

The analysts have cut their price target 32% to kr3.90per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses. 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 Otovo analyst has a price target of kr6.00 per share, while the most pessimistic values it at kr2.60. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 9.0% annualised decline to the end of 2024. That is a notable change from historical growth of 47% 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 6.1% per year. 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 take away is that the analysts reconfirmed their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Even so, long term profitability is more important for the value creation process. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Otovo's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Otovo analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for Otovo (1 is a bit concerning!) that you should be aware of.

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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.