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The analysts covering Riverstone Holdings Limited (SGX:AP4) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
After the downgrade, the four analysts covering Riverstone Holdings are now predicting revenues of RM1.2b in 2025. If met, this would reflect a meaningful 11% improvement in sales compared to the last 12 months. Per-share earnings are expected to increase 2.2% to RM0.19. Prior to this update, the analysts had been forecasting revenues of RM1.4b and earnings per share (EPS) of RM0.23 in 2025. Indeed, we can see that the analysts are a lot more bearish about Riverstone Holdings' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
Check out our latest analysis for Riverstone Holdings
The consensus price target fell 21% to S$0.93, with the weaker earnings outlook clearly leading analyst valuation estimates.
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. For example, we noticed that Riverstone Holdings' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 11% growth to the end of 2025 on an annualised basis. That is well above its historical decline of 16% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 12% per year. So while Riverstone Holdings' revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall 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. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
Not only have the analysts been downgrading the stock, but it looks like Riverstone Holdings might find it hard to maintain its dividends, if these forecasts prove accurate. You can learn more, and discover the 1 possible risk we've identified, for free on our platform here.