Yahoo Finance One Plant Health Care plc (LON:PHC) Analyst Is Reducing Their Forecasts For This Year
The latest analyst coverage could presage a bad day for Plant Health Care plc (LON:PHC), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.
Following the latest downgrade, Plant Health Care's sole analyst currently expects revenues in 2023 to be US$12m, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 52% to US$0.008 per share. Yet prior to the latest estimates, the analyst had been forecasting revenues of US$16m and losses of US$0.004 per share in 2023. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a serious cut to their revenue forecasts while also expecting losses per share to increase.
View our latest analysis for Plant Health Care
The consensus price target was broadly unchanged at US$0.53, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Plant Health Care's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 1.6% growth on an annualised basis. This is compared to a historical growth rate of 10% 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 shrink 5.8% per year. So it's clear that despite the slowdown in growth, Plant Health Care is still expected to grow meaningfully faster 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 Plant Health Care. Unfortunately, they also downgraded their revenue estimates, and our data indicates sales are expected to outperform the wider market. Even so, earnings per share are more important to the intrinsic value of the business. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Plant Health Care.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Plant Health Care going out as far as 2024, 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 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.
