Some Analysts Just Cut Their Otovo ASA (OB:OTOVO) Estimates

Market forces rained on the parade of Otovo ASA (OB:OTOVO) shareholders today, when the analysts downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the latest downgrade, the current consensus, from the four analysts covering Otovo, is for revenues of kr924m in 2024, which would reflect an uncomfortable 8.6% reduction in Otovo's sales over the past 12 months. Per-share losses are expected to creep up to kr1.41. Yet prior to the latest estimates, the analysts had been forecasting revenues of kr1.3b and losses of kr1.35 per share in 2024. 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.

See our latest analysis for Otovo

The consensus price target fell 24% to kr3.03, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.

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. We would highlight that sales are expected to reverse, with a forecast 8.6% annualised revenue 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 6.3% 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 note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Otovo. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Otovo's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Otovo going forwards.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Otovo, including major dilution from new stock issuance in the past year. Learn more, and discover the 2 other warning signs we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.