Time To Worry? Analysts Are Downgrading Their Elmera Group ASA (OB:ELMRA) Outlook

Market forces rained on the parade of Elmera Group ASA (OB:ELMRA) shareholders today, when the analysts downgraded their forecasts for next year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the latest downgrade, the two analysts covering Elmera Group provided consensus estimates of kr23b revenue in 2023, which would reflect a noticeable 3.4% decline on its sales over the past 12 months. Statutory earnings per share are anticipated to dive 25% to kr2.06 in the same period. Prior to this update, the analysts had been forecasting revenues of kr27b and earnings per share (EPS) of kr2.53 in 2023. Indeed, we can see that the analysts are a lot more bearish about Elmera Group's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Elmera Group

Analysts made no major changes to their price target of kr21.50, suggesting the downgrades are not expected to have a long-term impact on Elmera Group's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Elmera Group, with the most bullish analyst valuing it at kr31.00 and the most bearish at kr12.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 2.8% by the end of 2023. This indicates a significant reduction from annual growth of 32% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 0.6% per year. The forecasts do look bearish for Elmera Group, since they're expecting it to shrink faster than the industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Elmera Group. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Elmera Group revenue is expected to perform worse than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected next year, we wouldn't be surprised if investors were a bit wary of Elmera Group.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Elmera Group's financials, such as its declining profit margins. For more information, you can click here to discover this and the 1 other warning sign 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.