The latest analyst coverage could presage a bad day for Micro-Mechanics (Holdings) Ltd. (SGX:5DD), 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 latest downgrade, the current consensus, from the solitary analyst covering Micro-Mechanics (Holdings), is for revenues of S$71m in 2023, which would reflect a definite 14% reduction in Micro-Mechanics (Holdings)'s sales over the past 12 months. Statutory earnings per share are supposed to crater 51% to S$0.067 in the same period. Before this latest update, the analyst had been forecasting revenues of S$80m and earnings per share (EPS) of S$0.12 in 2023. Indeed, we can see that the analyst is a lot more bearish about Micro-Mechanics (Holdings)'s prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
See our latest analysis for Micro-Mechanics (Holdings)
The consensus price target fell 8.6% to S$2.12, with the weaker earnings outlook clearly leading analyst valuation estimates.
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. We would highlight that sales are expected to reverse, with a forecast 14% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 6.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 14% per year. It's pretty clear that Micro-Mechanics (Holdings)'s revenues are expected to perform substantially worse 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. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Micro-Mechanics (Holdings).
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Micro-Mechanics (Holdings) going out as far as 2024, and you can see them 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 that insiders are buying.
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