Time To Worry? Analysts Just Downgraded Their Vector Limited (NZSE:VCT) Outlook

One thing we could say about the analysts on Vector Limited (NZSE:VCT) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. At NZ$3.94, shares are up 6.5% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the downgrade, the consensus from four analysts covering Vector is for revenues of NZ$1.0b in 2025, implying a not inconsiderable 10% decline in sales compared to the last 12 months. Statutory earnings per share are presumed to soar 164% to NZ$0.20. Previously, the analysts had been modelling revenues of NZ$1.2b and earnings per share (EPS) of NZ$0.23 in 2025. Indeed, we can see that the analysts are a lot more bearish about Vector's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Vector

Despite the cuts to forecast earnings, there was no real change to the NZ$4.11 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

Of course, another way to look at these forecasts is to place them into context against the industry itself. Over the past five years, revenues have declined around 3.6% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 10% decline in revenue until the end of 2025. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 4.7% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Vector to suffer worse than the wider industry.

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 Vector. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Vector'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 Vector after today.

Unfortunately, the earnings downgrade - if accurate - may also place pressure on Vector'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.

You can also see our analysis of Vector's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.