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The analysts covering Tate & Lyle plc (LON:TATE) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the latest downgrade, the current consensus, from the eight analysts covering Tate & Lyle, is for revenues of UK£1.7b in 2024, which would reflect a small 5.4% reduction in Tate & Lyle's sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£1.9b in 2024. The consensus view seems to have become more pessimistic on Tate & Lyle, noting the substantial drop in revenue estimates in this update.
Check out our latest analysis for Tate & Lyle
We'd point out that there was no major changes to their price target of UK£9.07, suggesting the latest estimates were not enough to shift their view on the value of the business. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Tate & Lyle, with the most bullish analyst valuing it at UK£9.75 and the most bearish at UK£8.10 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would also point out that the forecast 5.4% annualised revenue decline to the end of 2024 is better than the historical trend, which saw revenues shrink 17% annually 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 4.1% per year. So while a broad number of companies are forecast to grow, unfortunately Tate & Lyle is expected to see its sales affected worse than other companies in the 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. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Tate & Lyle going forwards.
Not only have the analysts been downgrading the stock, but it looks like Tate & Lyle 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.