Some Hafnia Limited (OB:HAFNI) Analysts Just Made A Major Cut To Next Year's 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 and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the five analysts covering Hafnia, is for revenues of US$1.2b in 2023, which would reflect a concerning 34% reduction in Hafnia's sales over the past 12 months. Statutory earnings per share are anticipated to nosedive 23% to US$1.14 in the same period. Prior to this update, the analysts had been forecasting revenues of US$1.4b and earnings per share (EPS) of US$1.35 in 2023. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a considerable drop in earnings per share numbers as well.

See our latest analysis for Hafnia

Analysts made no major changes to their price target of kr85.00, suggesting the downgrades are not expected to have a long-term impact on Hafnia's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Hafnia, with the most bullish analyst valuing it at kr95.00 and the most bearish at kr77.00 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

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 42% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 23% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 9.1% per year. The forecasts do look bearish for Hafnia, since they're expecting it to shrink faster than the 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 Hafnia. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Hafnia revenue is expected to perform worse than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Hafnia after the downgrade.

That said, the analysts might have good reason to be negative on Hafnia, given recent substantial insider selling. For more information, you can click here to discover this and the 3 other concerns we've identified.

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.