One Analyst Just Shaved Their EG Industries Berhad (KLSE:EG) Forecasts Dramatically
The latest analyst coverage could presage a bad day for EG Industries Berhad (KLSE:EG), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. 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 EG Industries Berhad's one analyst is for revenues of RM2.4b in 2027, which would reflect a substantial 69% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 25% to RM0.17. Previously, the analyst had been modelling revenues of RM2.7b and earnings per share (EPS) of RM0.19 in 2027. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a considerable drop in earnings per share numbers as well.
View our latest analysis for EG Industries Berhad
The analyst made no major changes to their price target of RM2.93, suggesting the downgrades are not expected to have a long-term impact on EG Industries Berhad's valuation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that EG Industries Berhad's rate of growth is expected to accelerate meaningfully, with the forecast 69% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 2.3% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect EG Industries Berhad to grow faster than the wider industry.
The Bottom Line
The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for EG Industries Berhad. Unfortunately, the analyst also downgraded their revenue estimates, although our data indicates revenues are expected to perform better 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 EG Industries Berhad after the downgrade.
A high debt burden combined with a downgrade of this magnitude always gives us some reason for concern, especially if these forecasts are just the first sign of a business downturn. See why we're concerned about EG Industries Berhad's balance sheet by visiting our risks dashboard for free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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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.