One Seeka Limited (NZSE:SEK) Analyst Just Cut Their EPS Forecasts

Market forces rained on the parade of Seeka Limited (NZSE:SEK) shareholders today, when the covering analyst downgraded their 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, Seeka's solo analyst is now forecasting revenues of NZ$339m in 2022. This would be a notable 9.5% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to plummet 54% to NZ$0.17 in the same period. Prior to this update, the analyst had been forecasting revenues of NZ$398m and earnings per share (EPS) of NZ$0.42 in 2022. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.

Check out our latest analysis for Seeka

The consensus price target fell 9.3% to NZ$4.85, with the weaker earnings outlook clearly leading analyst valuation estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Seeka'shistorical trends, as the 9.5% annualised revenue growth to the end of 2022 is roughly in line with the 11% annual revenue growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 8.8% per year. It's clear that while Seeka's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

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. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of Seeka.

Unfortunately, the earnings downgrade - if accurate - may also place pressure on Seeka's mountain of debt, which could lead to some belt tightening for shareholders. To see more of our financial analysis, you can click through to our free platform to learn more about its balance sheet and specific concerns we've identified.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.