Embracer Group AB (publ) Just Missed Earnings; Here's What Analysts Are Forecasting Now

It's been a mediocre week for Embracer Group AB (publ) (STO:EMBRAC B) shareholders, with the stock dropping 13% to kr128 in the week since its latest quarterly results. It was a pretty negative result overall, with revenues of kr8.6b missing analyst predictions by 6.0%. Worse, the business reported a statutory loss of kr1.92 per share, a substantial decline on analyst expectations of a profit. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Embracer Group

Taking into account the latest results, the seven analysts covering Embracer Group provided consensus estimates of kr35.4b revenue in 2025, which would reflect a discernible 6.1% decline over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 98% to kr1.73. Before this latest report, the consensus had been expecting revenues of kr37.1b and kr3.55 per share in losses. Although the revenue estimates have fallen somewhat, Embracer Group'sfuture looks a little different to the past, with a very favorable reduction to the loss per share forecasts in particular.

The analysts have cut their price target 19% to kr151per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Embracer Group analyst has a price target of kr250 per share, while the most pessimistic values it at kr58.70. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 12% annualised decline to the end of 2025. That is a notable change from historical growth of 36% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 9.0% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Embracer Group is expected to lag the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Yet - earnings are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Embracer Group going out to 2027, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Embracer Group you should be aware of.

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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.