Today is shaping up negative for Shaftesbury PLC (LON:SHB) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. At UK£6.30, shares are up 7.1% 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.

After the downgrade, the consensus from Shaftesbury's six analysts is for revenues of UK£99m in 2021, which would reflect an uncomfortable 11% decline in sales compared to the last year of performance. Prior to the latest estimates, the analysts were forecasting revenues of UK£125m in 2021. It looks like forecasts have become a fair bit less optimistic on Shaftesbury, given the pretty serious reduction to revenue estimates.

Check out our latest analysis for Shaftesbury

We'd point out that there was no major changes to their price target of UK£5.43, suggesting the latest estimates were not enough to shift their view on the value of the business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Shaftesbury at UK£6.60 per share, while the most bearish prices it at UK£4.35. 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 Shaftesbury shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 20% by the end of 2021. This indicates a significant reduction from annual growth of 3.7% 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 5.1% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Shaftesbury is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Shaftesbury after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Shaftesbury's financials, such as dilutive stock issuance over the past year. For more information, you can click here to discover this and the 1 other warning sign we've identified.

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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