News Flash: One Nuchev Limited (ASX:NUC) Analyst Has Been Trimming Their Revenue Forecasts

Simply Wall St
·3 min read

One thing we could say about the covering analyst on Nuchev Limited (ASX:NUC) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as the analyst signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the current consensus from Nuchev's one analyst is for revenues of AU$19m in 2021 which - if met - would reflect a satisfactory 5.9% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 37% to AU$0.17. Yet before this consensus update, the analyst had been forecasting revenues of AU$27m and losses of AU$0.17 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a serious cut to their revenue forecasts while also making no real change to the loss per share numbers.

View our latest analysis for Nuchev

earnings-and-revenue-growth
earnings-and-revenue-growth

the analyst has cut their price target 39% to AU$2.10 per share, signalling that the declining revenue and ongoing losses are contributing to the lower valuation.

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. It's pretty clear that there is an expectation that Nuchev's revenue growth will slow down substantially, with revenues next year expected to grow 5.9%, compared to a historical growth rate of 50% over the past three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.4% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Nuchev.

The Bottom Line

Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Nuchev's revenues are expected to grow slower than the wider market. The consensus price target fell measurably, with the analyst seemingly not reassured by recent business developments, leading to a lower estimate of Nuchev's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Nuchev going forwards.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2023, which can be seen 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.