One Orrön Energy AB (publ) (STO:ORRON) Analyst Just Cut Their EPS Forecasts

Market forces rained on the parade of Orrön Energy AB (publ) (STO:ORRON) shareholders today, when the covering analyst downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the solitary analyst covering Orrön Energy, is for revenues of €33m in 2025, which would reflect a definite 10% reduction in Orrön Energy's sales over the past 12 months. Per-share losses are expected to creep up to €0.05. Yet before this consensus update, the analyst had been forecasting revenues of €41m and losses of €0.04 per share in 2025. Ergo, there's been a clear change in sentiment, with the analyst administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

See our latest analysis for Orrön Energy

The consensus price target fell 5.5% to US$0.85, with the analyst clearly concerned about the company following the weaker revenue and earnings outlook. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Orrön Energy at US$1.01 per share, while the most bearish prices it at US$0.69. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would also point out that the forecast 10% annualised revenue decline to the end of 2025 is better than the historical trend, which saw revenues shrink 54% annually over the past five years Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 6.4% annually. So it's pretty clear that, while it does have declining revenues, the analyst also expect Orrön Energy to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst increased their loss per share estimates for this year. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Orrön Energy's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Orrön Energy.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Orrön Energy, including a short cash runway. For more information, you can click here to discover this and the 1 other concern 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 with high insider ownership.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.