Downgrade: Here's How Analysts See Manawa Energy Limited (NZSE:MNW) Performing In The Near Term

Today is shaping up negative for Manawa Energy Limited (NZSE:MNW) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the latest consensus from Manawa Energy's five analysts is for revenues of NZ$394m in 2023, which would reflect a substantial 49% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to bounce 75% to NZ$0.20. Prior to this update, the analysts had been forecasting revenues of NZ$439m and earnings per share (EPS) of NZ$0.48 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.

View our latest analysis for Manawa Energy

It'll come as no surprise then, to learn that the analysts have cut their price target 6.4% to NZ$6.16. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Manawa Energy at NZ$8.45 per share, while the most bearish prices it at NZ$4.50. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. One thing stands out from these estimates, which is that Manawa Energy is forecast to grow faster in the future than it has in the past, with revenues expected to display 49% annualised growth until the end of 2023. If achieved, this would be a much better result than the 17% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 0.3% per year. So it looks like Manawa Energy is expected to grow faster than its competitors, at least for a while.

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 Manawa Energy. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Manawa Energy.

Not only have the analysts been downgrading the stock, but it looks like Manawa Energy might find it hard to maintain its dividends, if these forecasts prove accurate. You can learn more, and discover the 1 possible risk we've identified, 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.