The latest analyst coverage could presage a bad day for Instone Real Estate Group SE (ETR:INS), 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.

After the downgrade, the consensus from Instone Real Estate Group's five analysts is for revenues of €707m in 2023, which would reflect a discernible 5.9% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing €827m of revenue in 2023. The consensus view seems to have become more pessimistic on Instone Real Estate Group, noting the substantial drop in revenue estimates in this update.

See our latest analysis for Instone Real Estate Group

Notably, the analysts have cut their price target 16% to €11.10, suggesting concerns around Instone Real Estate Group's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Instone Real Estate Group at €13.60 per share, while the most bearish prices it at €7.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Instone Real Estate Group shareholders.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 4.7% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 24% 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 13% annually for the foreseeable future. So it's pretty clear that Instone Real Estate Group's revenues are expected to shrink slower than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for next year. Analysts also expect revenues to perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Instone Real Estate Group's future valuation. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Instone Real Estate Group going forwards.

Still got questions? At least one of Instone Real Estate Group's five analysts has provided estimates out to 2024, which can be seen for 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.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here