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One thing we could say about the covering analyst on Clover Corporation Limited (ASX:CLV) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.
Following the downgrade, the current consensus from Clover's solo analyst is for revenues of AU$82m in 2024 which - if met - would reflect a modest 2.1% increase on its sales over the past 12 months. Statutory earnings per share are forecast to be AU$0.037, approximately in line with the last 12 months. Before this latest update, the analyst had been forecasting revenues of AU$93m and earnings per share (EPS) of AU$0.05 in 2024. Indeed, we can see that the analyst is a lot more bearish about Clover's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
Check out our latest analysis for Clover
The consensus price target fell 15% to AU$1.10, 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. It's clear from the latest estimates that Clover's rate of growth is expected to accelerate meaningfully, with the forecast 2.1% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 1.5% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 7.1% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Clover is expected to grow slower than the wider industry.
The Bottom Line
The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Clover's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Clover.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Clover going out as far as 2026, and you can see them free on our platform here.