Today is shaping up negative for Ovzon AB (publ) (STO:OVZON) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the most recent consensus for Ovzon from its two analysts is for revenues of kr223m in 2021 which, if met, would be a solid 11% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of kr269m in 2021. The consensus view seems to have become more pessimistic on Ovzon, noting the substantial drop in revenue estimates in this update.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Ovzon's rate of growth is expected to accelerate meaningfully, with the forecast 11% revenue growth noticeably faster than its historical growth of 4.7% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.0% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Ovzon is expected to grow much faster than its industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Ovzon next year. The analysts also expect revenues to grow faster than the wider market. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Ovzon going forwards.
Looking for more information? At least one of Ovzon's two analysts has provided estimates out to 2023, which can be seen 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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