SkyCity Entertainment Group Limited (NZSE:SKC) Analysts Just Trimmed Their Revenue Forecasts By 15%

Market forces rained on the parade of SkyCity Entertainment Group Limited (NZSE:SKC) shareholders today, when the analysts downgraded their forecasts for this year. 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 consensus from ten analysts covering SkyCity Entertainment Group is for revenues of NZ$596m in 2022, implying a perceptible 3.2% decline in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing NZ$705m of revenue in 2022. It looks like forecasts have become a fair bit less optimistic on SkyCity Entertainment Group, given the measurable cut to revenue estimates.

View our latest analysis for SkyCity Entertainment Group

We'd point out that there was no major changes to their price target of NZ$3.53, suggesting the latest estimates were not enough to shift their view on the value of the business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic SkyCity Entertainment Group analyst has a price target of NZ$3.95 per share, while the most pessimistic values it at NZ$3.14. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would also point out that the forecast 6.4% annualised revenue decline to the end of 2022 is better than the historical trend, which saw revenues shrink 9.1% annually over the past five years Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 13% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect SkyCity Entertainment Group to suffer worse than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for SkyCity Entertainment Group this year. They also expect company revenue to perform worse than the wider market. 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 SkyCity Entertainment Group after today.

Unsatisfied? At least one of SkyCity Entertainment Group's ten analysts has provided estimates out to 2024, which can be seen for free on our platform here.

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 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.