The Consensus EPS Estimates For Prosafe SE (OB:PRS) Just Fell A Lot

The analyst covering Prosafe SE (OB:PRS) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

Following the latest downgrade, the current consensus, from the one analyst covering Prosafe, is for revenues of US$101m in 2023, which would reflect a painful 27% reduction in Prosafe's sales over the past 12 months. Losses are supposed to balloon 58% to US$6.11 per share. However, before this estimates update, the consensus had been expecting revenues of US$147m and US$4.17 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Prosafe

The consensus price target fell 11% to US$21.14, implicitly signalling that lower earnings per share are a leading indicator for Prosafe's valuation. 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$24.31 per share, while the most pessimistic values it at US$17.97. Even so, with a relatively close grouping of estimates, it looks like the analyst is quite confident in their valuations, suggesting Prosafe is an easy business to forecast or the underlying assumptions are obvious.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Prosafe's past performance and to peers in the same industry. One more thing stood out to us about these estimates, and it's the idea that Prosafe's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 47% to the end of 2023. This tops off a historical decline of 19% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 10% 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 note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Prosafe. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Prosafe.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Prosafe going out as far as 2025, and you can see them 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.