Analyst Forecasts Just Got A Whole Lot More Bearish On Piedmont Office Realty Trust, Inc. (NYSE:PDM)

One thing we could say about the analysts on Piedmont Office Realty Trust, Inc. (NYSE:PDM) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. Bidders are definitely seeing a different story, with the stock price of US$17.67 reflecting a 14% rise in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the latest downgrade, the two analysts covering Piedmont Office Realty Trust provided consensus estimates of US$481m revenue in 2020, which would reflect a not inconsiderable 9.8% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$553m in 2020. The consensus view seems to have become more pessimistic on Piedmont Office Realty Trust, noting the measurable cut to revenue estimates in this update.

Check out our latest analysis for Piedmont Office Realty Trust

The consensus price target fell 5.1% to US$23.25, with the analysts clearly less optimistic about Piedmont Office Realty Trust's valuation following this update. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Piedmont Office Realty Trust analyst has a price target of US$26.00 per share, while the most pessimistic values it at US$21.00. Even so, with a relatively close grouping of analyst estimates, it looks to us as though the analysts are quite confident in their valuations, suggesting that Piedmont Office Realty Trust is an easy business to forecast or that the underlying assumptions are knowable.

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. Over the past five years, revenues have declined around 2.1% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 9.8% decline in revenue next year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.8% per year. So while a broad number of companies are forecast to decline, unfortunately Piedmont Office Realty Trust is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They also expect company revenue to perform worse 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 Piedmont Office Realty Trust's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Piedmont Office Realty Trust going forwards.

Of course, there's always more to the story. At least one of Piedmont Office Realty Trust's two analysts has provided estimates out to 2024, which can be seen for 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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