CLS Holdings plc (LON:CLI) Analysts Just Trimmed Their Revenue Forecasts By 13%
The latest analyst coverage could presage a bad day for CLS Holdings plc (LON:CLI), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the downgrade, the consensus from two analysts covering CLS Holdings is for revenues of UK£112m in 2022, implying a sizeable 20% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£128m in 2022. It looks like forecasts have become a fair bit less optimistic on CLS Holdings, given the substantial drop in revenue estimates.
See our latest analysis for CLS Holdings
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the CLS Holdings' past performance and to peers in the same industry. One more thing stood out to us about these estimates, and it's the idea that CLS Holdings' decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 36% to the end of 2022. This tops off a historical decline of 15% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 0.7% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect CLS Holdings to suffer worse than the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for CLS Holdings this year. They're also anticipating slower revenue growth than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on CLS Holdings after today.
Uncomfortably, our automated valuation tool also suggests that CLS Holdings stock could be overvalued following the downgrade. Shareholders could be left disappointed if these estimates play out. You can learn more about our valuation methodology for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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