The experts covering Catella AB (publ) (STO:CAT B) provided a dosage of negativeness to investors today, by making a considerable modification to their statutory projections for this year. Revenue price quotes were cut dramatically as the experts indicated a weaker outlook – maybe an indication that financiers must temper their expectations also.
Following the latest downgrade, the current consensus, from the two analysts covering Catella, is for revenues of kr1.9b in 2023, which would reflect an uneasy 9.1% reduction in Catella’s sales over the past 12 months. Before the latest update, the analysts were foreseeing kr2.2b of revenue in 2023. It looks like forecasts have become a fair bit less optimistic on Catella, given the measurable cut to revenue price quotes.
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Notably, the experts have cut their price target 14% to kr60.00, suggesting concerns around Catella’s valuation.
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. Over the past five years, revenues have declined around 0.2% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 12% decline in revenue until the end of 2023. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 15% annually. So it’s pretty clear that, while it does have declining revenues, the experts also expect Catella to suffer worse than the wider industry.
The Bottom Line
The most important thing to take away is that experts cut their earnings estimates for this year. They also expect company revenue to perform worse than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn’t be surprised if the market became a lot more cautious on Catella after today.
In light of the downgrade, our automated discounted cash flow valuation tool suggests that Catella could now be moderately overvalued. Find out why, and see how we estimate the valuation for 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.
Valuation is complex, but we’re helping make it simple.
Find out whether Catella is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst projections 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 cost-sensitive business announcements or qualitative material. Simply Wall St has actually no position in any stocks pointed out.
