Safe Bulkers, Inc. (NYSE:SB) Analysts Just Trimmed Their Revenue Forecasts By 13%

One thing we could say about the analysts on Safe Bulkers, Inc. (NYSE:SB) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. The stock price has risen 7.9% to US$3.01 over the past week. 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.

After the downgrade, the consensus from Safe Bulkers' three analysts is for revenues of US$326m in 2023, which would reflect a chunky 8.3% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing US$373m of revenue in 2023. It looks like forecasts have become a fair bit less optimistic on Safe Bulkers, given the substantial drop in revenue estimates.

Our analysis indicates that SB is potentially undervalued!

We'd point out that there was no major changes to their price target of US$5.11, suggesting the latest estimates were not enough to shift their view on the value of the business. 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 Safe Bulkers at US$7.00 per share, while the most bearish prices it at US$2.85. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 6.7% by the end of 2023. This indicates a significant reduction from annual growth of 18% 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 8.3% annually for the foreseeable future. The forecasts do look comparatively optimistic for Safe Bulkers, since they're expecting it to shrink slower than the industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for next year. The analysts also expect revenues to perform better than the wider market. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Safe Bulkers going forwards.

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 Safe Bulkers' financials, such as a weak balance sheet. For more information, you can click here to discover this and the 2 other warning signs we've identified.

You can also see our analysis of Safe Bulkers' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.