The latest analyst coverage could presage a bad day for Pantaflix AG (ETR:PAL), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the latest downgrade, the two analysts covering Pantaflix provided consensus estimates of €19m revenue in 2022, which would reflect a disturbing 36% decline on its sales over the past 12 months. Losses are supposed to balloon 156% to €0.33 per share. Yet before this consensus update, the analysts had been forecasting revenues of €23m and losses of €0.23 per share in 2022. 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 Pantaflix

There was no major change to the consensus price target of €1.83, 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 Pantaflix analyst has a price target of €2.00 per share, while the most pessimistic values it at €1.65. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Pantaflix is an easy business to forecast or the underlying assumptions are obvious.

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. Over the past five years, revenues have declined around 0.9% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 36% decline in revenue until the end of 2022. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 3.4% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Pantaflix to suffer worse than the wider industry.

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 Pantaflix. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Pantaflix after the downgrade.