Stock Analysis

One Forecaster Is Now More Bearish On MAG Interactive AB (publ) (STO:MAGI) Than They Used To Be

OM:MAGI
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The analyst covering MAG Interactive AB (publ) (STO:MAGI) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.

Following the latest downgrade, MAG Interactive's solo analyst currently expects revenues in 2023 to be kr392m, approximately in line with the last 12 months. Per-share losses are expected to explode, reaching kr0.60 per share. Before this latest update, the analyst had been forecasting revenues of kr460m and earnings per share (EPS) of kr0.75 in 2023. There looks to have been a major change in sentiment regarding MAG Interactive's prospects, with a substantial drop in revenues and the analyst now forecasting a loss instead of a profit.

Check out our latest analysis for MAG Interactive

earnings-and-revenue-growth
OM:MAGI Earnings and Revenue Growth January 23rd 2023

The consensus price target fell 19% to kr25.00, implicitly signalling that lower earnings per share are a leading indicator for MAG Interactive's valuation.

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. It's pretty clear that there is an expectation that MAG Interactive's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 1.2% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than MAG Interactive.

The Bottom Line

The biggest low-light for us was that the forecasts for MAG Interactive dropped from profits to a loss this year. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that MAG Interactive's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of MAG Interactive.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts 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.