These analysts believe that sales of Muhibbah Engineering (M) Bhd. (KLSE: MUHIBAH) are threatened

Today looks negative for Muhibbah Engineering (M) Bhd. (KLSE:MUHIBAH) shareholders, with analysts issuing a substantial negative revision to this year’s forecast. There has been a pretty drastic reduction in their revenue estimates, perhaps an implicit admission that previous forecasts were far too optimistic.

Following the downgrade, the most recent consensus for Muhibbah Engineering (M) Bhd from its three analysts is for revenue of RM1.1 billion in 2022, which if achieved would represent a major increase of 24 % of its sales in the last 12 months. Prior to the latest update, analysts were forecasting RM1.2 billion in revenue in 2022. It seems the forecast has turned a little less optimistic for Muhibbah Engineering (M) Bhd given the substantial drop in revenue estimates. .

See our latest analysis for Muhibbah Engineering (M) Bhd

KLSE: MUHIBAH Earnings and Revenue Growth September 8, 2022

The consensus price target fell 11% to RM0.50 as analysts were significantly less bullish on Muhibbah Engineering (M) Bhd’s valuation following the update. The consensus price target is only an average of individual analyst targets, so it might be useful to see how wide the range of the underlying estimates is. Muhibbah Engineering (M) Bhd’s most optimistic analyst has a price target of RM0.57 per share, while the most pessimistic puts it at RM0.40. Analysts certainly have differing opinions on the company, but the scatter of estimates is not wide enough in our opinion to suggest that extreme results may be in store for shareholders of Muhibbah Engineering (M) Bhd.

These estimates are interesting, but it may be useful to draw broader lines when seeing how the forecast compares, both to the past performance of Muhibbah Engineering (M) Bhd and that of its peers in the same industry. . For example, we have noticed that the growth rate of Muhibbah Engineering (M) Bhd is expected to accelerate significantly, with revenues expected to show 24% growth by the end of 2022 on an annualized basis. That’s well above its historic decline of 10% per year over the past five years. Compare that to analyst estimates for the entire industry, which suggest that (in total) industry revenue is expected to grow by 11% annually. Not only is Muhibbah Engineering (M) Bhd’s revenue expected to improve, but it looks like analysts are also expecting it to grow faster than the overall industry.

The essential

The faint bright light was that analysts cut their revenue forecast for Muhibbah Engineering (M) Bhd this year. They also expect revenue to grow faster than the overall market. The consensus price target fell measurably as analysts seemed unreassured by recent trading developments, leading to a lower estimate for the future valuation of Muhibbah Engineering (M) Bhd. Given the dramatic change in sentiment, we would understand if investors became more cautious about Muhibbah Engineering (M) Bhd after today.

Unanswered questions? We have estimates for Muhibbah Engineering (M) Bhd from its three analysts through 2024, and you can view them for free on our platform here.

Another way to search for interesting businesses that might be reach an inflection point is to track whether management is buying or selling, with our free list of growing companies insiders are buying.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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Sallie R. Loera