Revenue Downgrade: Here's What Analysts Forecast For Discovery Limited (JSE:DSY)

Market forces rained on the parade of Discovery Limited (JSE:DSY) 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. At R117, shares are up 4.9% 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.

After the downgrade, the consensus from Discovery's four analysts is for revenues of R42b in 2024, which would reflect a substantial 54% decline in sales compared to the last year of performance. Prior to the latest estimates, the analysts were forecasting revenues of R69b in 2024. The consensus view seems to have become more pessimistic on Discovery, noting the sizeable cut to revenue estimates in this update.

View our latest analysis for Discovery

There was no particular change to the consensus price target of R183, with Discovery's latest outlook seemingly not enough to result in a change of valuation.

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 54% by the end of 2024. This indicates a significant reduction from annual growth of 7.3% 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 42% annually for the foreseeable future. The forecasts do look bearish for Discovery, since they're expecting it to shrink faster than the industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Discovery this year. They're also forecasting for revenues to shrink at a quicker rate than companies in the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Discovery after today.

Need some more information? We have estimates for Discovery from its four analysts out until 2026, and you can see them 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 with high insider ownership.

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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.