Yahoo Finance Newsflash: Palace Capital Plc (LON:PCA) Analysts Have Been Trimming Their Revenue Forecasts
One thing we could say about the analysts on Palace Capital Plc (LON:PCA) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the latest downgrade, the four analysts covering Palace Capital provided consensus estimates of UK£17m revenue in 2023, which would reflect a concerning 65% decline on its sales over the past 12 months. Before the latest update, the analysts were foreseeing UK£23m of revenue in 2023. The consensus view seems to have become more pessimistic on Palace Capital, noting the sizeable cut to revenue estimates in this update.
View our latest analysis for Palace Capital
There was no particular change to the consensus price target of UK£3.45, with Palace Capital's latest outlook seemingly not enough to result in a change of valuation. 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. There are some variant perceptions on Palace Capital, with the most bullish analyst valuing it at UK£3.64 and the most bearish at UK£3.20 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Palace Capital is an easy business to forecast or the underlying assumptions are obvious.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Palace Capital's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 65% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 21% 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 0.6% per year. It's pretty clear that Palace Capital's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Palace Capital this year. They also expect company revenue to perform worse than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Palace Capital going forwards.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Palace Capital's business, like a weak balance sheet. For more information, you can click here to discover this and the 3 other concerns we've identified.
You can also see our analysis of Palace Capital's Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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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.
