One Analyst Thinks Desenio Group AB (publ)'s (STO:DSNO) Revenues Are Under Threat

Market forces rained on the parade of Desenio Group AB (publ) (STO:DSNO) shareholders today, when the covering analyst downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the consensus from Desenio Group's solitary analyst is for revenues of kr1.0b in 2022, which would reflect a definite 8.7% decline in sales compared to the last year of performance. After this downgrade, the company is anticipated to report a loss of kr0.10 in 2022, a sharp decline from a profit over the last year. Before this latest update, the analyst had been forecasting revenues of kr1.2b and earnings per share (EPS) of kr0.35 in 2022. So we can see that the consensus has become notably more bearish on Desenio Group's outlook with these numbers, making a substantial drop in this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

View our latest analysis for Desenio Group

The consensus price target fell 81% to kr2.50, implicitly signalling that lower earnings per share are a leading indicator for Desenio Group's valuation.

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 also point out that the forecast 8.7% annualised revenue decline to the end of 2022 is roughly in line with the historical trend, which saw revenues shrink 7.4% annually over the past year Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 9.9% annually. So it's pretty clear that, while it does have declining revenues, the analyst also expect Desenio Group to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst is expecting Desenio Group to become unprofitable this year. 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 the analyst, we'd understand if readers now felt a bit wary of Desenio Group.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Desenio Group's business, like its declining profit margins. Learn more, and discover the 4 other warning signs 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.