Yahoo Finance Analysts Just Shaved Their Top Glove Corporation Bhd. (KLSE:TOPGLOV) Forecasts Dramatically
Today is shaping up negative for Top Glove Corporation Bhd. (KLSE:TOPGLOV) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
Following the latest downgrade, the 20 analysts covering Top Glove Corporation Bhd provided consensus estimates of RM4.0b revenue in 2023, which would reflect an uncomfortable 13% decline on its sales over the past 12 months. Losses are supposed to balloon 54% to RM0.025 per share. Previously, the analysts had been modelling revenues of RM5.4b and earnings per share (EPS) of RM0.025 in 2023. There looks to have been a major change in sentiment regarding Top Glove Corporation Bhd's prospects, with a sizeable cut to revenues and the analysts now forecasting a loss instead of a profit.
Check out our latest analysis for Top Glove Corporation Bhd
There was no major change to the consensus price target of RM0.63, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Top Glove Corporation Bhd at RM1.81 per share, while the most bearish prices it at RM0.32. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Top Glove Corporation Bhd's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 17% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 20% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 15% annually for the foreseeable future. It's pretty clear that Top Glove Corporation Bhd's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Top Glove Corporation Bhd dropped from profits to a loss this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Top Glove Corporation Bhd's revenues are expected to grow slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Top Glove Corporation Bhd.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Top Glove Corporation Bhd analysts - 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.
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