One thing we could say about the covering analyst on N.V. Nederlandsche Apparatenfabriek Nedap (AMS:NEDAP) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. 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. Shares are up 6.5% to €36.00 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.
Following the downgrade, the consensus from solo analyst covering N.V. Nederlandsche Apparatenfabriek Nedap is for revenues of €145m in 2020, implying a sizeable 24% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to nosedive 91% to €0.33 in the same period. Prior to this update, the analyst had been forecasting revenues of €217m and earnings per share (EPS) of €3.50 in 2020. Indeed, we can see that the analyst is a lot more bearish about N.V. Nederlandsche Apparatenfabriek Nedap's prospects, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.
It'll come as no surprise then, to learn that the analyst has cut their price target 48% to €34.00.
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 24%, a significant reduction from annual growth of 1.8% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.3% next year. It's pretty clear that N.V. Nederlandsche Apparatenfabriek Nedap's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for N.V. Nederlandsche Apparatenfabriek Nedap. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales 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 N.V. Nederlandsche Apparatenfabriek Nedap.
As you can see, the covering analyst clearly isn't bullish, and there might be good reason for that. We've identified some potential issues with N.V. Nederlandsche Apparatenfabriek Nedap's financials, such as the risk of cutting its dividend. Learn more, and discover the 1 other flag we've identified, for free on our platform here.
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