One thing we could say about the analysts on SSP Group plc (LON:SSPG) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. At UK£3.16, shares are up 4.3% in the past 7 days. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the current consensus from SSP Group's 15 analysts is for revenues of UK£769m in 2021 which - if met - would reflect a sizeable 62% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 63% to UK£0.41. Yet prior to the latest estimates, the analysts had been forecasting revenues of UK£907m and losses of UK£0.36 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

View our latest analysis for SSP Group

There was no major change to the consensus price target of UK£3.48, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic SSP Group analyst has a price target of UK£4.00 per share, while the most pessimistic values it at UK£1.90. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the SSP Group's past performance and to peers in the same industry. One thing stands out from these estimates, which is that SSP Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 162% annualised growth until the end of 2021. If achieved, this would be a much better result than the 4.3% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 15% annually. So it looks like SSP Group is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at SSP Group. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of SSP Group.

That said, the analysts might have good reason to be negative on SSP Group, given dilutive stock issuance over the past year. Learn more, and discover the 1 other concern we've identified, 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.

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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