Analysts Just Made A Major Revision To Their Hyve Group Plc (LON:HYVE) Revenue Forecasts
The latest analyst coverage could presage a bad day for Hyve Group Plc (LON:HYVE), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the latest downgrade, the current consensus, from the four analysts covering Hyve Group, is for revenues of UK£105m in 2020, which would reflect a sizeable 50% reduction in Hyve Group's sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 61% to UK£0.86. Yet before this consensus update, the analysts had been forecasting revenues of UK£120m and losses of UK£0.85 per share in 2020. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also making no real change to the loss per share numbers.
Check out our latest analysis for Hyve Group
The consensus price target fell 6.2% to UK£1.22, with the analysts clearly concerned about the weaker revenue outlook and expectation of ongoing losses. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Hyve Group analyst has a price target of UK£1.85 per share, while the most pessimistic values it at UK£0.65. 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.
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 revenue decline of 50%, a significant reduction from annual growth of 10% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.0% annually for the foreseeable future. It's pretty clear that Hyve Group's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Hyve Group's revenues are expected to grow slower than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Hyve Group after today.
That said, the analysts might have good reason to be negative on Hyve Group, given major dilution from new stock issuance in the past year. 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.
This article by Simply Wall St is general in nature. 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.
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