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The Workspace Group plc (LON:WKP) Analysts Have Been Trimming Their Sales Forecasts

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The latest analyst coverage could presage a bad day for Workspace Group plc (LON:WKP), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. 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 current consensus, from the four analysts covering Workspace Group, is for revenues of UK£114m in 2022, which would reflect a stressful 20% reduction in Workspace Group's sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£151m in 2022. It looks like forecasts have become a fair bit less optimistic on Workspace Group, given the sizeable cut to revenue estimates.

Check out our latest analysis for Workspace Group

earnings-and-revenue-growth
earnings-and-revenue-growth

Additionally, the consensus price target for Workspace Group increased 7.2% to UK£8.57, showing a clear increase in optimism from the analysts involved. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Workspace Group, with the most bullish analyst valuing it at UK£10.25 and the most bearish at UK£6.70 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. We would highlight that sales are expected to reverse, with a forecast 20% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 9.1% 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 4.3% annually for the foreseeable future. It's pretty clear that Workspace Group's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Workspace Group going forwards.

Thirsting for more data? We have estimates for Workspace Group from its four analysts out until 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.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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