The latest analyst coverage could presage a bad day for Centuria Office REIT (ASX:COF), 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) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

After the downgrade, the consensus from Centuria Office REIT's eight analysts is for revenues of AU$137m in 2023, which would reflect a not inconsiderable 18% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to plummet 26% to AU$0.14 in the same period. Prior to this update, the analysts had been forecasting revenues of AU$156m and earnings per share (EPS) of AU$0.17 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a considerable drop in earnings per share numbers as well.

View our latest analysis for Centuria Office REIT  earnings-and-revenue-growth

Analysts made no major changes to their price target of AU$2.07, suggesting the downgrades are not expected to have a long-term impact on Centuria Office REIT's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Centuria Office REIT analyst has a price target of AU$2.50 per share, while the most pessimistic values it at AU$1.76. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 18% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 23% 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 3.5% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Centuria Office REIT is expected to lag 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. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales 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 Centuria Office REIT.

There might be good reason for analyst bearishness towards Centuria Office REIT, like dilutive stock issuance over the past year. 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.

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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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