The latest analyst coverage could presage a bad day for Washington H. Soul Pattinson and Company Limited (ASX:SOL), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the dual analysts covering Washington H. Soul Pattinson provided consensus estimates of AU$1.8b revenue in 2023, which would reflect a sizeable 36% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of AU$2.1b in 2023. It looks like forecasts have become a fair bit less optimistic on Washington H. Soul Pattinson, given the measurable cut to revenue estimates.

See our latest analysis for Washington H. Soul Pattinson

We'd point out that there was no major changes to their price target of AU$28.25, suggesting the latest estimates were not enough to shift their view on the value of the business. 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. There are some variant perceptions on Washington H. Soul Pattinson, with the most bullish analyst valuing it at AU$29.60 and the most bearish at AU$26.90 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 36% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 0.7% annually for the foreseeable future. The forecasts do look bearish for Washington H. Soul Pattinson, since they're expecting it to shrink faster than the industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. The analysts also expect revenues to shrink faster than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Washington H. Soul Pattinson after today.

Want more information? We have estimates for Washington H. Soul Pattinson from its dual analysts out until 2025, 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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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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