The analysts covering Nanofilm Technologies International Limited (SGX:MZH) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Surprisingly the share price has been buoyant, rising 15% to S$1.50 in the past 7 days. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.
Following the downgrade, the most recent consensus for Nanofilm Technologies International from its eight analysts is for revenues of S$266m in 2023 which, if met, would be a decent 12% increase on its sales over the past 12 months. Statutory earnings per share are presumed to swell 17% to S$0.078. Previously, the analysts had been modelling revenues of S$298m and earnings per share (EPS) of S$0.098 in 2023. Indeed, we can see that the analysts are a lot more bearish about Nanofilm Technologies International's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
See our latest analysis for Nanofilm Technologies International
It'll come as no surprise then, to learn that the analysts have cut their price target 17% to S$1.40. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Nanofilm Technologies International at S$2.20 per share, while the most bearish prices it at S$1.20. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
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 Nanofilm Technologies International's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 12% growth on an annualised basis. This is compared to a historical growth rate of 17% over the past five years. Compare this to the 9 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 11% per year. Factoring in the forecast slowdown in growth, it looks like Nanofilm Technologies International is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Nanofilm Technologies International going out to 2025, and you can see them 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.