These Analysts Think Momentum Group Limited's (JSE:MTM) Sales Are Under Threat

Today is shaping up negative for Momentum Group Limited (JSE:MTM) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the latest consensus from Momentum Group's three analysts is for revenues of R62b in 2025, which would reflect a notable 10% improvement in sales compared to the last 12 months. Per-share earnings are expected to climb 13% to R3.21. Prior to this update, the analysts had been forecasting revenues of R71b and earnings per share (EPS) of R3.52 in 2025. It looks like analyst sentiment has fallen somewhat in this update, with a measurable cut to revenue estimates and a minor downgrade to earnings per share numbers as well.

See our latest analysis for Momentum Group

What's most unexpected is that the consensus price target rose 7.4% to R30.03, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

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. The analysts are definitely expecting Momentum Group's growth to accelerate, with the forecast 10% annualised growth to the end of 2025 ranking favourably alongside historical growth of 0.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 39% annually. So it's clear with the acceleration in growth, Momentum Group is expected to grow meaningfully 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 Momentum Group. Sadly they also cut their revenue estimates, although at least the company is expected to perform a bit better than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given the stark change in sentiment, we'd understand if investors became more cautious on Momentum Group after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Momentum Group going out to 2027, 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 backed by insiders.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.