Need To Know: This Analyst Just Made A Substantial Cut To Their Selvaag Bolig ASA (OB:SBO) Estimates

The analyst covering Selvaag Bolig ASA (OB:SBO) 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) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

After this downgrade, Selvaag Bolig's single analyst is now forecasting revenues of kr2.0b in 2025. This would be a modest 3.0% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to plummet 21% to kr1.51 in the same period. Before this latest update, the analyst had been forecasting revenues of kr2.3b and earnings per share (EPS) of kr1.91 in 2025. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

View our latest analysis for Selvaag Bolig

The average price target climbed 6.7% to kr32.00 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

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. One thing stands out from these estimates, which is that Selvaag Bolig is forecast to grow faster in the future than it has in the past, with revenues expected to display 3.0% annualised growth until the end of 2025. If achieved, this would be a much better result than the 2.5% annual decline over the past five years. What's also interesting is that our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue decline 0.8% annually for the foreseeable future. So it's pretty clear that Selvaag Bolig is expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, they also downgraded their revenue estimates, and our data indicates sales are expected to outperform the wider market. Even so, earnings per share are more important to the intrinsic value of the business. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of Selvaag Bolig.

There might be good reason for analyst bearishness towards Selvaag Bolig, like recent substantial insider selling. 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 with high insider ownership.

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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.