HeveaBoard Berhad's (KLSE:HEVEA) Analyst Just Slashed This Year's Estimates

Market forces rained on the parade of HeveaBoard Berhad (KLSE:HEVEA) shareholders today, when the covering analyst downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

Following the downgrade, the latest consensus from HeveaBoard Berhad's lone analyst is for revenues of RM398m in 2024, which would reflect a substantial 25% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to nosedive 65% to RM0.002 in the same period. Prior to this update, the analyst had been forecasting revenues of RM489m and earnings per share (EPS) of RM0.006 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.

View our latest analysis for HeveaBoard Berhad

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that HeveaBoard Berhad's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 25% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 5.5% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 9.4% annually. Not only are HeveaBoard Berhad's revenues expected to improve, it seems that the analyst is also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like the analyst has become a lot more bearish on HeveaBoard Berhad, and their negativity could be grounds for caution.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with HeveaBoard Berhad's business, like the risk of cutting its dividend. Learn more, and discover the 1 other risk we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.