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

One thing we could say about the analysts on Selvaag Bolig ASA (OB:SBO) - 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 latest downgrade, the twin analysts covering Selvaag Bolig provided consensus estimates of kr2.5b revenue in 2022, which would reflect a painful 27% decline on its sales over the past 12 months. Statutory earnings per share are supposed to plunge 45% to kr2.96 in the same period. Before this latest update, the analysts had been forecasting revenues of kr3.0b and earnings per share (EPS) of kr3.61 in 2022. Indeed, we can see that the analysts are a lot more bearish about Selvaag Bolig's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Selvaag Bolig

The consensus price target fell 8.1% to kr49.33, with the weaker earnings outlook clearly leading analyst valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Selvaag Bolig, with the most bullish analyst valuing it at kr57.00 and the most bearish at kr40.00 per share. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 34% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 1.3% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Selvaag Bolig is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Selvaag Bolig'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 Selvaag Bolig.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Selvaag Bolig's business, like the risk of cutting its dividend. For more information, you can click here to discover this and the 1 other risk we've identified.

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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.