Stock Analysis

Bearish: Analysts Just Cut Their 11 bit studios S.A. (WSE:11B) Revenue and EPS estimates

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One thing we could say about the analysts on 11 bit studios S.A. (WSE:11B) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the latest consensus from 11 bit studios' five analysts is for revenues of zł175m in 2023, which would reflect a substantial 118% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to bounce 118% to zł28.64. Before this latest update, the analysts had been forecasting revenues of zł197m and earnings per share (EPS) of zł39.13 in 2023. Indeed, we can see that the analysts are a lot more bearish about 11 bit studios' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for 11 bit studios

WSE:11B Earnings and Revenue Growth March 17th 2023

Despite the cuts to forecast earnings, there was no real change to the zł658 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic 11 bit studios analyst has a price target of zł726 per share, while the most pessimistic values it at zł602. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the 11 bit studios' past performance and to peers in the same industry. It's clear from the latest estimates that 11 bit studios' rate of growth is expected to accelerate meaningfully, with the forecast 86% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 13% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 17% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that 11 bit studios is expected to grow much faster than its 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 11 bit studios. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected next year, we wouldn't be surprised if investors were a bit wary of 11 bit studios.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple 11 bit studios analysts - going out to 2025, and you can see them 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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