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Today is shaping up negative for Pod Point Group Holdings Plc (LON:PODP) 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.
Following the latest downgrade, the current consensus, from the three analysts covering Pod Point Group Holdings, is for revenues of UK£70m in 2022, which would reflect a definite 8.1% reduction in Pod Point Group Holdings' sales over the past 12 months. Losses are expected to increase slightly, to UK£0.10 per share. However, before this estimates update, the consensus had been expecting revenues of UK£80m and UK£0.095 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
Check out our latest analysis for Pod Point Group Holdings
The consensus price target fell 28% to UK£1.19, implicitly signalling that lower earnings per share are a leading indicator for Pod Point Group Holdings' valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Pod Point Group Holdings at UK£2.40 per share, while the most bearish prices it at UK£0.80. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
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 16% by the end of 2022. This indicates a significant reduction from annual growth of 58% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 21% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Pod Point Group Holdings is expected to lag 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 Pod Point Group Holdings. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Pod Point Group Holdings' future valuation. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Pod Point Group Holdings after today.