Yahoo Finance Time To Worry? Analysts Just Downgraded Their Vista Group International Limited (NZSE:VGL) Outlook
The latest analyst coverage could presage a bad day for Vista Group International Limited (NZSE:VGL), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business. At NZ$1.76, shares are up 6.0% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
After the downgrade, the three analysts covering Vista Group International are now predicting revenues of NZ$107m in 2021. If met, this would reflect a huge 22% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 81% to NZ$0.045. Previously, the analysts had been modelling revenues of NZ$124m and earnings per share (EPS) of NZ$0.034 in 2021. There looks to have been a major change in sentiment regarding Vista Group International's prospects, with a substantial drop in revenues and the analysts now forecasting a loss instead of a profit.
View our latest analysis for Vista Group International
There was no major change to the consensus price target of NZ$2.05, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Vista Group International, with the most bullish analyst valuing it at NZ$2.25 and the most bearish at NZ$1.95 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Vista Group International's past performance and to peers in the same industry. The analysts are definitely expecting Vista Group International's growth to accelerate, with the forecast 22% annualised growth to the end of 2021 ranking favourably alongside historical growth of 10% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 18% per year. Vista Group International is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The biggest low-light for us was that the forecasts for Vista Group International dropped from profits to a loss this year. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Vista Group International after the downgrade.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Vista Group International going out to 2023, and you can see them 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.
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.
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