Today is shaping up negative for American International Group, Inc. (NYSE:AIG) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the consensus from eleven analysts covering American International Group is for revenues of US$27b in 2024, implying a sizeable 41% decline in sales compared to the last 12 months. After this downgrade, the company is anticipated to report a loss of US$2.07 in 2024, a sharp decline from a profit over the last year. Yet before this consensus update, the analysts had been forecasting revenues of US$27b and losses of US$1.73 per share in 2024. So it's pretty clear the analysts have mixed opinions on American International Group even after this update; although they reconfirmed their revenue numbers, it came at the cost of a noticeable increase in per-share losses.

The consensus price target held steady at US$82.84, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation.

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. One more thing stood out to us about these estimates, and it's the idea that American International Group's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 65% to the end of 2024. This tops off a historical decline of 1.3% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 5.3% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect American International Group to suffer worse than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at American International Group. There were no major changes to revenue forecasts, with analysts still expecting the business to grow slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on American International Group after the downgrade.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple American International Group analysts - going out to 2026, 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.

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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.