The analyst covering Sarine Technologies Ltd. (SGX:U77) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the latest downgrade, the one analyst covering Sarine Technologies provided consensus estimates of US$42m revenue in 2023, which would reflect a considerable 18% decline on its sales over the past 12 months. Statutory earnings per share are anticipated to nosedive 92% to US$0.00075 in the same period. Prior to this update, the analyst had been forecasting revenues of US$49m and earnings per share (EPS) of US$0.0065 in 2023. Indeed, we can see that the analyst is a lot more bearish about Sarine Technologies' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
View our latest analysis for Sarine Technologies
The consensus price target fell 15% to US$0.19, with the weaker earnings outlook clearly leading analyst valuation estimates.
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 18% by the end of 2023. This indicates a significant reduction from annual growth of 1.1% 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 14% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Sarine Technologies is expected to lag 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. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Sarine Technologies' revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Sarine Technologies.
There might be good reason for analyst bearishness towards Sarine Technologies, like its declining profit margins. Learn more, and discover the 2 other warning signs 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.
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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.
