Analysts Just Shaved Their CD Projekt S.A. (WSE:CDR) Forecasts Dramatically

One thing we could say about the analysts on CD Projekt S.A. (WSE:CDR) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. 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 consensus from 17 analysts covering CD Projekt is for revenues of zł842m in 2022, implying a perceptible 7.1% decline in sales compared to the last 12 months. Statutory earnings per share are presumed to expand 15% to zł2.81. Before this latest update, the analysts had been forecasting revenues of zł971m and earnings per share (EPS) of zł3.61 in 2022. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

View our latest analysis for CD Projekt

The consensus price target fell 6.6% to zł136, with the weaker earnings outlook clearly leading analyst valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on CD Projekt, with the most bullish analyst valuing it at zł239 and the most bearish at zł85.00 per share. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. We would highlight that sales are expected to reverse, with a forecast 9.4% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 33% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 26% annually for the foreseeable future. It's pretty clear that CD Projekt's revenues are expected to perform substantially worse than 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. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of CD Projekt.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with CD Projekt's financials, such as concerns around earnings quality. Learn more, and discover the 2 other concerns we've identified, for 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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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.