The latest analyst coverage could presage a bad day for SMT Scharf AG (ETR:S4AA), 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 the analysts have soured majorly on the business.

Following the latest downgrade, the current consensus, from the two analysts covering SMT Scharf, is for revenues of €73m in 2023, which would reflect a substantial 20% reduction in SMT Scharf's sales over the past 12 months. Statutory earnings per share are supposed to plummet 83% to €0.16 in the same period. Before this latest update, the analysts had been forecasting revenues of €88m and earnings per share (EPS) of €0.99 in 2023. Indeed, we can see that the analysts are a lot more bearish about SMT Scharf's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for SMT Scharf

It'll come as no surprise then, to learn that the analysts have cut their price target 8.1% to €14.25.

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 annualised revenue decline of 20% by the end of 2023. This indicates a significant reduction from annual growth of 7.4% 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 3.5% annually for the foreseeable future. It's pretty clear that SMT Scharf's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.