Some Analysts Just Cut Their Hafnia Limited (OB:HAFNI) Estimates

The latest analyst coverage could presage a bad day for Hafnia Limited (OB:HAFNI), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the consensus from four analysts covering Hafnia is for revenues of US$1.3b in 2023, implying an uncomfortable 13% decline in sales compared to the last 12 months. Per-share earnings are expected to bounce 40% to US$1.34. Previously, the analysts had been modelling revenues of US$1.5b and earnings per share (EPS) of US$1.47 in 2023. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a small dip in EPS estimates to boot.

Our analysis indicates that HAFNI is potentially undervalued!

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 10% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 19% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 10% annually for the foreseeable future.

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 Hafnia. Unfortunately they also trimmed their revenue estimates, although the company is expected to perform at about the same rate as the wider market next year. Given the stark change in sentiment, we'd understand if investors became more cautious on Hafnia after today.

That said, the analysts might have good reason to be negative on Hafnia, given concerns around earnings quality. Learn more, and discover the 2 other risks 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.