One Analyst Thinks Zaptec ASA's (OB:ZAP) Revenues Are Under Threat

The latest analyst coverage could presage a bad day for Zaptec ASA (OB:ZAP), 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.

After this downgrade, Zaptec's lone analyst is now forecasting revenues of kr1.4b in 2023. This would be a substantial 27% improvement in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of kr1.56 per share this year. Prior to this update, the analyst had been forecasting revenues of kr1.6b and earnings per share (EPS) of kr2.70 in 2023. Indeed, we can see that the analyst is a lot more bearish about Zaptec's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Zaptec

The consensus price target fell 60% to kr20.00, with the weaker earnings outlook clearly leading analyst valuation estimates.

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. The period to the end of 2023 brings more of the same, according to the analyst, with revenue forecast to display 60% growth on an annualised basis. That is in line with its 59% annual growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 6.3% per year. So it's pretty clear that Zaptec is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, the analyst also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The consensus price target fell measurably, with the analyst seemingly not reassured by recent business developments, leading to a lower estimate of Zaptec's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Zaptec after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Zaptec going out as far as 2025, 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.