Downgrade: Here's How Analysts See Famur S.A. (WSE:FMF) Performing In The Near Term

The latest analyst coverage could presage a bad day for Famur S.A. (WSE:FMF), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. 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 latest downgrade, the four analysts covering Famur provided consensus estimates of zł1.1b revenue in 2021, which would reflect a stressful 22% decline on its sales over the past 12 months. Per-share earnings are expected to leap 103% to zł0.23. Prior to this update, the analysts had been forecasting revenues of zł1.3b and earnings per share (EPS) of zł0.30 in 2021. Indeed, we can see that the analysts are a lot more bearish about Famur's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Famur

It'll come as no surprise then, to learn that the analysts have cut their price target 15% to zł3.01. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Famur at zł3.30 per share, while the most bearish prices it at zł2.80. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 18% by the end of 2021. This indicates a significant reduction from annual growth of 19% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.6% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Famur is expected to lag the wider industry.

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. 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 next year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Famur.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Famur's business, like its declining profit margins. For more information, you can click here to discover this and the 2 other risks we've identified.

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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