Cause For Concern? One Analyst Thinks Calgro M3 Holdings Limited's (JSE:CGR) Revenues Are Under Threat

One thing we could say about the covering analyst on Calgro M3 Holdings Limited (JSE:CGR) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. The stock price has risen 4.8% to R5.25 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.

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Following the downgrade, the latest consensus from Calgro M3 Holdings' solitary analyst is for revenues of R975m in 2026, which would reflect a meaningful 19% improvement in sales compared to the last 12 months. Per-share earnings are expected to accumulate 6.2% to R1.67. Previously, the analyst had been modelling revenues of R1.2b and earnings per share (EPS) of R2.15 in 2026. 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.

View our latest analysis for Calgro M3 Holdings

The analyst made no major changes to their price target of R9.00, suggesting the downgrades are not expected to have a long-term impact on Calgro M3 Holdings' valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analyst is definitely expecting Calgro M3 Holdings' growth to accelerate, with the forecast 19% annualised growth to the end of 2026 ranking favourably alongside historical growth of 0.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect Calgro M3 Holdings to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Calgro M3 Holdings going forwards.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Calgro M3 Holdings, including recent substantial insider selling. Learn more, and discover the 2 other concerns 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 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.