Analyst Forecasts Just Became More Bearish On Ovzon AB (publ) (STO:OVZON)

Market forces rained on the parade of Ovzon AB (publ) (STO:OVZON) shareholders today, when the analysts downgraded their 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. At kr43.35, shares are up 4.1% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the latest downgrade, the two analysts covering Ovzon provided consensus estimates of kr368m revenue in 2023, which would reflect a perceptible 4.2% decline on its sales over the past 12 months. Losses are supposed to balloon 168% to kr0.10 per share. Previously, the analysts had been modelling revenues of kr463m and earnings per share (EPS) of kr0.76 in 2023. So we can see that the consensus has become notably more bearish on Ovzon's outlook with these numbers, making a sizeable cut to 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 Ovzon

The consensus price target fell 9.1% to kr50.00, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 4.2% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 7.8% 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 2.5% annually for the foreseeable future. It's pretty clear that Ovzon's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts are expecting Ovzon 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. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. 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 Ovzon after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Ovzon, including dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other warning signs we've identified.

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.