Market forces rained on the parade of Seeka Limited (NZSE:SEK) shareholders today, when the covering analyst downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.
Following this downgrade, Seeka's lone analyst are forecasting 2023 revenues to be NZ$349m, approximately in line with the last 12 months. Statutory earnings per share are presumed to increase 2.3% to NZ$0.16. Previously, the analyst had been modelling revenues of NZ$393m and earnings per share (EPS) of NZ$0.26 in 2023. 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 16% to NZ$3.05, with the weaker earnings outlook clearly leading analyst valuation estimates.
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. It's pretty clear that there is an expectation that Seeka's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 0.2% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.9% per year. Factoring in the forecast slowdown in growth, it seems obvious that Seeka is also expected to grow slower than other industry participants.
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. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Seeka.
As you can see, the analyst clearly isn't bullish, and there might be good reason for that. We've identified some potential issues with Seeka's financials, such as its declining profit margins. Learn more, and discover the 3 other flags 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.
About NZSE:SEK
Seeka
Provides orchard lease and management, and post-harvest and retail services to the horticulture industry in New Zealand and Australia.
Undervalued with reasonable growth potential.
