One thing we could say about the analysts on Atlantic Sapphire ASA (OB:ASA) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the downgrade, the current consensus from Atlantic Sapphire's six analysts is for revenues of US$37m in 2022 which - if met - would reflect a huge 136% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 76% to US$0.15. However, before this estimates update, the consensus had been expecting revenues of US$48m and US$0.14 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
The consensus price target fell 8.4% to kr32.80, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Atlantic Sapphire analyst has a price target of kr50.00 per share, while the most pessimistic values it at kr22.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
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. It's clear from the latest estimates that Atlantic Sapphire's rate of growth is expected to accelerate meaningfully, with the forecast 5x annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 54% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.3% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Atlantic Sapphire is expected to grow much faster than its 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, although our data indicates revenues are expected to perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Atlantic Sapphire's future valuation. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Atlantic Sapphire after today.
There might be good reason for analyst bearishness towards Atlantic Sapphire, like major dilution from new stock issuance in the past year. Learn more, and discover the 1 other warning sign we've identified, for free on our platform here.
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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.
Atlantic Sapphire ASA, together with its subsidiaries, engages in the land-based salmon farming business.
The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.
|Analysis Area||Score (0-6)|
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Limited growth with imperfect balance sheet.