These Analysts Think MasterCraft Boat Holdings, Inc.'s (NASDAQ:MCFT) Sales Are Under Threat

Market forces rained on the parade of MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT) shareholders today, when the analysts downgraded their forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following this downgrade, MasterCraft Boat Holdings' six analysts are forecasting 2023 revenues to be US$641m, approximately in line with the last 12 months. Statutory earnings per share are presumed to bounce 20% to US$4.21. Previously, the analysts had been modelling revenues of US$712m and earnings per share (EPS) of US$4.54 in 2023. It looks like analyst sentiment has fallen somewhat in this update, with a substantial drop in revenue estimates and a small dip in earnings per share numbers as well.

View our latest analysis for MasterCraft Boat Holdings

The consensus price target fell 6.4% to US$32.40, with the weaker earnings outlook clearly leading analyst valuation estimates. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values MasterCraft Boat Holdings at US$46.00 per share, while the most bearish prices it at US$22.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 0.8% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 16% 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 4.6% annually for the foreseeable future. It's pretty clear that MasterCraft Boat Holdings' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for MasterCraft Boat Holdings. 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. Given the stark change in sentiment, we'd understand if investors became more cautious on MasterCraft Boat Holdings after today.

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 MasterCraft Boat Holdings analysts - going out to 2024, 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.