Need To Know: Analysts Just Made A Substantial Cut To Their Star Bulk Carriers Corp. (NASDAQ:SBLK) Estimates

The analysts covering Star Bulk Carriers Corp. (NASDAQ:SBLK) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the four analysts covering Star Bulk Carriers provided consensus estimates of US$670m revenue in 2023, which would reflect a concerning 40% decline on its sales over the past 12 months. Statutory earnings per share are supposed to plummet 38% to US$1.73 in the same period. Before this latest update, the analysts had been forecasting revenues of US$781m and earnings per share (EPS) of US$4.53 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.

Check out our latest analysis for Star Bulk Carriers

Analysts made no major changes to their price target of US$26.50, suggesting the downgrades are not expected to have a long-term impact on Star Bulk Carriers' valuation. 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. The most optimistic Star Bulk Carriers analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$20.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 64% by the end of 2023. This indicates a significant reduction from annual growth of 21% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 3.5% annually for the foreseeable future. So it's pretty clear that Star Bulk Carriers' revenues are expected to shrink faster 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 Star Bulk Carriers. Unfortunately they also cut their revenue estimates for this year, and they expect sales to lag the wider market. That said, earnings per share are more important for creating value for shareholders. 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 Star Bulk Carriers 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 Star Bulk Carriers' financials, such as its declining profit margins. Learn more, and discover the 1 other flag we've identified, for free on our platform here.

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.