Yahoo Finance 7C Solarparken AG (ETR:HRPK) Analysts Just Cut Their EPS Forecasts Substantially
The latest analyst coverage could presage a bad day for 7C Solarparken AG (ETR:HRPK), 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) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the latest downgrade, the current consensus, from the twin analysts covering 7C Solarparken, is for revenues of €42m in 2020, which would reflect a considerable 9.8% reduction in 7C Solarparken's sales over the past 12 months. Statutory earnings per share are anticipated to nosedive 57% to €0.06 in the same period. Prior to this update, the analysts had been forecasting revenues of €48m and earnings per share (EPS) of €0.13 in 2020. Indeed, we can see that the analysts are a lot more bearish about 7C Solarparken's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
See our latest analysis for 7C Solarparken
Analysts made no major changes to their price target of €3.85, suggesting the downgrades are not expected to have a long-term impact on 7C Solarparken'svaluation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic 7C Solarparken analyst has a price target of €4.00 per share, while the most pessimistic values it at €3.70. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 9.8%, a significant reduction from annual growth of 17% 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 4.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - 7C Solarparken is expected to lag the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for 7C Solarparken. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that 7C Solarparken's revenues are expected to grow slower than 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 7C Solarparken after the downgrade.
There might be good reason for analyst bearishness towards 7C Solarparken, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other flags we've identified.
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