Time To Worry? Analysts Just Downgraded Their Sensys Gatso Group AB (publ) (STO:SENS) Outlook

The analysts covering Sensys Gatso Group AB (publ) (STO:SENS) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the latest consensus from Sensys Gatso Group's two analysts is for revenues of kr735m in 2021, which would reflect a major 62% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of kr849m in 2021. The consensus view seems to have become more pessimistic on Sensys Gatso Group, noting the measurable cut to revenue estimates in this update.

Check out our latest analysis for Sensys Gatso Group

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Sensys Gatso Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 62% annualised growth until the end of 2021. If achieved, this would be a much better result than the 0.7% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 8.2% per year. So it looks like Sensys Gatso Group is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Sensys Gatso Group this year. They're also forecasting more rapid revenue growth than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Sensys Gatso Group after today.

Uncomfortably, our automated valuation tool also suggests that Sensys Gatso Group stock could be overvalued following the downgrade. Shareholders could be left disappointed if these estimates play out. Learn why, and examine the assumptions that underpin our valuation by visiting our free platform here to learn more about our valuation approach.

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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