What You Need To Know About The 11 bit studios S.A. (WSE:11B) Analyst Downgrade Today

Market forces rained on the parade of 11 bit studios S.A. (WSE:11B) shareholders today, when the analysts downgraded their forecasts for next year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the current consensus from 11 bit studios' five analysts is for revenues of zł197m in 2023 which - if met - would reflect a substantial 145% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing zł227m of revenue in 2023. The consensus view seems to have become more pessimistic on 11 bit studios, noting the measurable cut to revenue estimates in this update.

Check out our latest analysis for 11 bit studios

There was no particular change to the consensus price target of zł608, with 11 bit studios' latest outlook seemingly not enough to result in a change of valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic 11 bit studios analyst has a price target of zł726 per share, while the most pessimistic values it at zł515. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. The analysts are definitely expecting 11 bit studios' growth to accelerate, with the forecast 105% annualised growth to the end of 2023 ranking favourably alongside historical growth of 13% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 20% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect 11 bit studios to grow faster than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for 11 bit studios next year. They're also forecasting more rapid revenue growth than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on 11 bit studios after today.

Unanswered questions? At least one of 11 bit studios' five analysts has provided estimates out to 2025, which can be seen 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.