DNO ASA (OB:DNO) Analysts Are More Bearish Than They Used To Be

The latest analyst coverage could presage a bad day for DNO ASA (OB:DNO), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. At kr9.57, shares are up 8.0% in the past 7 days. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

After the downgrade, the four analysts covering DNO are now predicting revenues of US$877m in 2024. If met, this would reflect a major 31% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to bounce 339% to US$0.084. Prior to this update, the analysts had been forecasting revenues of US$984m and earnings per share (EPS) of US$0.20 in 2024. Indeed, we can see that the analysts are a lot more bearish about DNO's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for DNO

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the DNO's past performance and to peers in the same industry. The analysts are definitely expecting DNO's growth to accelerate, with the forecast 31% annualised growth to the end of 2024 ranking favourably alongside historical growth of 4.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 3.1% per year. It seems obvious that as part of the brighter growth outlook, DNO is expected to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for DNO. Unfortunately, they also downgraded their revenue estimates, and our data indicates sales are expected to outperform the wider market. Even so, earnings per share are more important to the intrinsic value of the business. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on DNO, and their negativity could be grounds for caution.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with DNO's business, like its declining profit margins. For more information, you can click here to discover this and the 1 other warning sign we've identified.

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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.