Bearish: Analysts Just Cut Their Kennedy-Wilson Holdings, Inc. (NYSE:KW) Revenue and EPS estimates

The latest analyst coverage could presage a bad day for Kennedy-Wilson Holdings, Inc. (NYSE:KW), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. At US$16.59, shares are up 5.5% in the past 7 days. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the consensus from twin analysts covering Kennedy-Wilson Holdings is for revenues of US$584m in 2023, implying a small 2.6% decline in sales compared to the last 12 months. Statutory earnings per share are expected to be US$0.47, roughly flat on the last 12 months. Before this latest update, the analysts had been forecasting revenues of US$814m and earnings per share (EPS) of US$2.84 in 2023. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a large cut to earnings per share numbers as well.

Check out our latest analysis for Kennedy-Wilson Holdings

Analysts made no major changes to their price target of US$19.00, suggesting the downgrades are not expected to have a long-term impact on Kennedy-Wilson Holdings' valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Kennedy-Wilson Holdings analyst has a price target of US$20.00 per share, while the most pessimistic values it at US$18.00. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

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 also point out that the forecast 2.6% annualised revenue decline to the end of 2023 is better than the historical trend, which saw revenues shrink 7.8% annually 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 7.1% per year. So while a broad number of companies are forecast to grow, unfortunately Kennedy-Wilson Holdings is expected to see its sales affected worse than other companies in the 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 Kennedy-Wilson Holdings. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Kennedy-Wilson Holdings' revenues are expected to grow slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Kennedy-Wilson Holdings after the downgrade.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Kennedy-Wilson Holdings' financials, such as its declining profit margins. 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.