Some Prosafe SE (OB:PRS) Analysts Just Made A Major Cut To Next Year's Estimates

Market forces rained on the parade of Prosafe SE (OB:PRS) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

After the downgrade, the consensus from Prosafe's dual analysts is for revenues of US$131m in 2023, which would reflect a sizeable 34% decline in sales compared to the last year of performance. After this downgrade, the company is anticipated to report a loss of US$5.02 in 2023, a sharp decline from a profit over the last year. Yet before this consensus update, the analysts had been forecasting revenues of US$147m and losses of US$4.17 per share in 2023. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

View our latest analysis for Prosafe

The consensus price target fell 25% to US$24.27, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Prosafe analyst has a price target of US$266 per share, while the most pessimistic values it at US$253. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. Over the past five years, revenues have declined around 21% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 34% decline in revenue until the end of 2023. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 12% annually. So while a broad number of companies are forecast to grow, unfortunately Prosafe is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Prosafe's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Prosafe.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Prosafe's financials, such as its declining profit margins. Learn more, and discover the 2 other risks we've identified, 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.