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

One thing we could say about the analysts on Prosafe SE (OB:PRS) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the latest consensus from Prosafe's dual analysts is for revenues of US$144m in 2024, which would reflect a major 47% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 54% to US$1.74 per share. Prior to this update, the analysts had been forecasting revenues of US$213m and earnings per share (EPS) of US$1.62 in 2024. There looks to have been a major change in sentiment regarding Prosafe's prospects, with a sizeable cut to revenues and the analysts now forecasting a loss instead of a profit.

Check out our latest analysis for Prosafe

The consensus price target fell 27% to US$12.56, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Prosafe analyst has a price target of US$16.49 per share, while the most pessimistic values it at US$8.63. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. For example, we noticed that Prosafe's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 47% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 17% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 5.9% per year. So it looks like Prosafe is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that analysts are expecting Prosafe to become unprofitable this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better 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.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Prosafe, including major dilution from new stock issuance in the past year. For more information, you can click here to discover this and the 2 other risks we've identified.

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.