This Standard Supply AS (OB:STSU) Analyst Is Way More Bearish Than They Used To Be

The latest analyst coverage could presage a bad day for Standard Supply AS (OB:STSU), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon. The stock price has risen 5.3% to kr5.27 over the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

After this downgrade, Standard Supply's solo analyst is now forecasting revenues of US$40m in 2023. This would be a huge 132% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 288% to US$0.05. Prior to this update, the analyst had been forecasting revenues of US$48m and earnings per share (EPS) of US$0.088 in 2023. Indeed, we can see that the analyst is a lot more bearish about Standard Supply's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Standard Supply

Despite the cuts to forecast earnings, there was no real change to the kr6.20 price target, showing that the analyst don't think the changes have a meaningful impact on its intrinsic value.

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. The analyst is definitely expecting Standard Supply's growth to accelerate, with the forecast 96% annualised growth to the end of 2023 ranking favourably alongside historical growth of 64% per annum over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 1.8% per year. So it's clear with the acceleration in growth, Standard Supply is expected to grow meaningfully 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. Sadly they also cut their revenue estimates, although at least the company is expected to perform a bit better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Standard Supply after the downgrade.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Standard Supply, including concerns around earnings quality. Learn more, and discover the 1 other flag we've identified, for 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.