These Analysts Just Made A Substantial Downgrade To Their Frasers Property Limited (SGX:TQ5) EPS Forecasts

Market forces rained on the parade of Frasers Property Limited (SGX:TQ5) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business. The stock price has risen 6.2% to S$0.94 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

After the downgrade, the consensus from Frasers Property's three analysts is for revenues of S$3.3b in 2023, which would reflect an uneasy 15% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to tumble 68% to S$0.07 in the same period. Prior to this update, the analysts had been forecasting revenues of S$4.0b and earnings per share (EPS) of S$0.096 in 2023. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

Check out the opportunities and risks within the SG Real Estate industry.

It'll come as no surprise then, to learn that the analysts have cut their price target 7.0% to S$1.18. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Frasers Property at S$1.25 per share, while the most bearish prices it at S$1.05. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One more thing stood out to us about these estimates, and it's the idea that Frasers Property's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 15% to the end of 2023. This tops off a historical decline of 2.8% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 3.0% per year. So while a broad number of companies are forecast to grow, unfortunately Frasers Property is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that analysts 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. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Frasers Property analysts - going out to 2025, and you can see them 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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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.