The latest analyst coverage could presage a bad day for HPP Holdings Berhad (KLSE:HPPHB), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After this downgrade, HPP Holdings Berhad's dual analysts are now forecasting revenues of RM84m in 2024. This would be a sizeable 21% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to plummet 46% to RM0.007 in the same period. Before this latest update, the analysts had been forecasting revenues of RM95m and earnings per share (EPS) of RM0.027 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for HPP Holdings Berhad

It'll come as no surprise then, to learn that the analysts have cut their price target 28% to RM0.41.

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. For example, we noticed that HPP Holdings Berhad's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 21% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 6.1% 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 14% annually. Not only are HPP Holdings Berhad's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than 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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better 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 HPP Holdings Berhad.

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 HPP Holdings Berhad's business, like its declining profit margins. For more information, you can click here to discover this and the 2 other flags we've identified.

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.

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

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.