Analysts Are More Bearish On Aker Solutions ASA (OB:AKSO) Than They Used To Be

The analysts covering Aker Solutions ASA (OB:AKSO) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the latest downgrade, the eight analysts covering Aker Solutions provided consensus estimates of kr38b revenue in 2024, which would reflect a disturbing 27% decline on its sales over the past 12 months. Statutory earnings per share are anticipated to nosedive 23% to kr3.49 in the same period. Prior to this update, the analysts had been forecasting revenues of kr49b and earnings per share (EPS) of kr4.22 in 2024. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a real cut to earnings per share numbers as well.

See our latest analysis for Aker Solutions

Analysts made no major changes to their price target of kr52.25, suggesting the downgrades are not expected to have a long-term impact on Aker Solutions' valuation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with a forecast 23% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 12% 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 8.1% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Aker Solutions is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected next year, we wouldn't be surprised if investors were a bit wary of Aker Solutions.

Unfortunately, by using these new estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Aker Solutions that suggests the company could be somewhat overvalued. You can learn more about our valuation methodology for 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.