Analyst Forecasts Just Became More Bearish On Meridian Energy Limited (NZSE:MEL)

The analysts covering Meridian Energy Limited (NZSE:MEL) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following this downgrade, Meridian Energy's five analysts are forecasting 2025 revenues to be NZ$4.9b, approximately in line with the last 12 months. Statutory earnings per share are anticipated to decline 17% to NZ$0.14 in the same period. Before this latest update, the analysts had been forecasting revenues of NZ$5.6b and earnings per share (EPS) of NZ$0.14 in 2025. It looks like analyst sentiment has fallen somewhat in this update, with a measurable cut to revenue estimates and a minor downgrade to earnings per share numbers as well.

Check out our latest analysis for Meridian Energy

Despite the cuts to forecast earnings, there was no real change to the NZ$6.58 price target, showing that the analysts 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. We would highlight that Meridian Energy's revenue growth is expected to slow, with the forecast 1.7% annualised growth rate until the end of 2025 being well below the historical 3.2% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.8% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Meridian Energy.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Meridian Energy's revenues are expected to grow slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Meridian Energy after today.

Worse yet, our risk analysis suggests that Meridian Energy may find it hard to maintain its dividend following these downgrades. For more information, you can click here to learn more about our dividend analysis and the 1 potential warning sign we've identified.

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 with high insider ownership.

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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.