One thing we could say about the analysts on Meridian Energy Limited (NZSE:MEL) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, Meridian Energy's five analysts currently expect revenues in 2025 to be NZ$4.9b, approximately in line with the last 12 months. Statutory earnings per share are anticipated to decline 17% to NZ$0.14 in the same period. Prior to this update, the analysts had been forecasting revenues of NZ$5.6b and earnings per share (EPS) of NZ$0.14 in 2025. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a minor downgrade to EPS estimates to boot.

View our latest analysis for Meridian Energy  earnings-and-revenue-growth

Analysts made no major changes to their price target of NZ$6.58, suggesting the downgrades are not expected to have a long-term impact on Meridian Energy's valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Meridian Energy's revenue growth is expected to slow, with the forecast 1.7% annualised growth rate until the end of 2025 being well below the historical 3.2% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.8% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Meridian Energy.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Meridian Energy. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Meridian Energy's revenues are expected to grow slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Meridian Energy going forwards.

After a downgrade like this one, it's pretty clear that previous forecasts were too optimistic. Worse, it's possible that the forecast future income could struggle to cover Meridian Energy'sdividend payments. For more information, you can click  here to learn more about our dividend analysis and the 1 potential risk we've identified.



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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.