The latest analyst coverage could presage a bad day for PowerCell Sweden AB (publ) (STO:PCELL), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the downgrade, the most recent consensus for PowerCell Sweden from its three analysts is for revenues of kr132m in 2021 which, if met, would be a major 43% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of kr208m in 2021. The consensus view seems to have become more pessimistic on PowerCell Sweden, noting the sizeable cut to revenue estimates in this update.
There was no particular change to the consensus price target of kr303, with PowerCell Sweden's 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. There are some variant perceptions on PowerCell Sweden, with the most bullish analyst valuing it at kr425 and the most bearish at kr215 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of PowerCell Sweden'shistorical trends, as the 43% annualised revenue growth to the end of 2021 is roughly in line with the 46% annual revenue growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 41% per year. It's clear that while PowerCell Sweden's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for PowerCell Sweden this year. Analysts also expect revenues to grow approximately in line with the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of PowerCell Sweden going forwards.
But wait - there's more! We have estimates for PowerCell Sweden from its three analysts out until 2023, and you can see them free on our platform here.
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