Downgrade: Here's How This Analyst Sees TalkPool AG (STO:TALK) Performing In The Near Term

One thing we could say about the covering analyst on TalkPool AG (STO:TALK) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

Following the latest downgrade, the current consensus, from the solitary analyst covering TalkPool, is for revenues of €18m in 2023, which would reflect a disturbing 22% reduction in TalkPool's sales over the past 12 months. Statutory earnings per share are supposed to tumble 85% to €0.03 in the same period. Before this latest update, the analyst had been forecasting revenues of €21m and earnings per share (EPS) of €0.10 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for TalkPool

The analyst made no major changes to their price target of €0.86, suggesting the downgrades are not expected to have a long-term impact on TalkPool's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the TalkPool's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 22% by the end of 2023. This indicates a significant reduction from annual growth of 2.9% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 10% annually for the foreseeable future. It's pretty clear that TalkPool's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of TalkPool.

There might be good reason for analyst bearishness towards TalkPool, like a weak balance sheet. Learn more, and discover the 2 other risks we've identified, for free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.