Yahoo Finance Cause For Concern? One Analyst Thinks Dream Unlimited Corp.'s (TSE:DRM) Revenues Are Under Threat
The latest analyst coverage could presage a bad day for Dream Unlimited Corp. (TSE:DRM), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the downgrade, the consensus from lone analyst covering Dream Unlimited is for revenues of CA$336m in 2023, implying a measurable 7.5% decline in sales compared to the last 12 months. Prior to the latest estimates, the analyst was forecasting revenues of CA$388m in 2023. The consensus view seems to have become more pessimistic on Dream Unlimited, noting the substantial drop in revenue estimates in this update.
Check out our latest analysis for Dream Unlimited
The consensus price target fell 8.6% to CA$42.50, with the analyst clearly less optimistic about Dream Unlimited's valuation following this update. 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 Dream Unlimited analyst has a price target of CA$50.00 per share, while the most pessimistic values it at CA$35.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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 4.8% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 9.9% 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 6.4% annually. So it's pretty clear that, while it does have declining revenues, the analyst also expect Dream Unlimited to suffer worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analyst cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. The consensus price target fell measurably, with the analyst seemingly not reassured by recent business developments, leading to a lower estimate of Dream Unlimited's future valuation. 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 Dream Unlimited after today.
Hungry for more information? One Dream Unlimited broker/analyst has provided estimates out to 2024, which can be seen 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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