Downgrade: Here's How Analysts See W5 Solutions AB (publ) (STO:W5) Performing In The Near Term

The latest analyst coverage could presage a bad day for W5 Solutions AB (publ) (STO:W5), 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 analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After this downgrade, W5 Solutions' three analysts are now forecasting revenues of kr474m in 2025. This would be a decent 19% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 94% to kr0.18 per share. Prior to this update, the analysts had been forecasting revenues of kr529m and earnings per share (EPS) of kr0.58 in 2025. There looks to have been a major change in sentiment regarding W5 Solutions' prospects, with a substantial drop in revenues and the analysts now forecasting a loss instead of a profit.

See our latest analysis for W5 Solutions

The consensus price target fell 35% to kr57.83, implicitly signalling that lower earnings per share are a leading indicator for W5 Solutions' valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the W5 Solutions' past performance and to peers in the same industry. We would highlight that W5 Solutions' revenue growth is expected to slow, with the forecast 15% annualised growth rate until the end of 2025 being well below the historical 38% p.a. growth over the last five years. Compare this to the 9 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 15% per year. Factoring in the forecast slowdown in growth, it looks like W5 Solutions is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for W5 Solutions dropped from profits to a loss next year. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as 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 W5 Solutions.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for W5 Solutions going out to 2026, 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 backed by insiders.

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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.