Yahoo Finance Revenue Downgrade: Here's What Analysts Forecast For Worley Limited (ASX:WOR)
The latest analyst coverage could presage a bad day for Worley Limited (ASX:WOR), 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 the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. At AU$10.66, shares are up 4.7% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.
Following the latest downgrade, the current consensus, from the ten analysts covering Worley, is for revenues of AU$9.5b in 2021, which would reflect a disturbing 27% reduction in Worley's sales over the past 12 months. Before the latest update, the analysts were foreseeing AU$11b of revenue in 2021. The consensus view seems to have become more pessimistic on Worley, noting the substantial drop in revenue estimates in this update.
View our latest analysis for Worley
Notably, the analysts have cut their price target 8.4% to AU$11.36, suggesting concerns around Worley's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Worley, with the most bullish analyst valuing it at AU$15.10 and the most bearish at AU$9.20 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Worley shareholders.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 27%, a significant reduction from annual growth of 5.8% 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 6.8% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Worley is expected to lag the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Worley 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. Given the stark change in sentiment, we'd understand if investors became more cautious on Worley after today.
Of course, this isn't the full story. At least one of Worley's ten analysts has provided estimates out to 2025, which can be seen for free on our platform here.
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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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