Well I can try and give me opinion. Bolded italics are their...

Well I can try and give me opinion. Bolded italics are their quotes

"Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon."

Well of course they need to be revised downwards for FY'21 as COE will only get the benefit of both volume and price from the GSAs for just 1/2 of the FY.

Revenue is simple adjustment but Earnings is different altogether and can be highly variable depending on what the analyst thinks. Most here will know I'm "welded" to the Residual Earnings method for my own valuations. So because of that I wont make any commentary on "earnings"

Revenue on the other handed is much simpler to follow. After downgrade you have 9 analysts with consensus forecast being
Revenues of AU$134m in 2021. (71% improvement in sales YoY). Previously, modelling revenues of AU$151m

There are a couple of things you (the investor) should be thinking about

1. What happened to the revenue ... was it lost or was it simply deferred. I contend it has been simply deferred to a subsequent period (not everyone agrees ... doesn't matter to me ... that's what makes a market, worms and all). So this FY we have 71% growth as the estimate (means prior year prior was $78.4M). The earlier (analyst) models that were at $151M would have growth at ~93%. What are those analysts now predicting for FY22 Revenue? BTW ... you should also be able to do the Gross Revenue estimates too based on what is in COE investor presentations and reports.

2. Growth. The market values (profitable) growth. How much is COE going to grow Revenue in FY'22? (I make roughly 21PJ as min contracted FY'22 = ~$168M + spot sales say 4PJ for $40M .... being intentionally vague) ... Roughly $208M or 55% growth. Heaven forbid we see a analyst report noting a decline in COE revenue growth (from 71% to 56%). Has to be in context of COE past performance which is " historical growth of 27% per annum over the past five years".
3. Gross Margin. This discussion is absent in the WoW link ... but margin is a factor in earnings so it is accounted for. What I would be looking at is whether COE is growing it's overall net margin ... how much of the revenue is ending up as income (that can be reinvested). This is important and you can think about the activities that COE is doing that improves that (e.g. OP3D and Athena)

4. Share price between 30c and 50c ... I agree mostly ... I think I share this fairly often (the RE model of 5,000 MC iterations of net income based on probability distribution)




If I allow 95% confidence level (so +/- 2 std deviations I get IV = $0.40 +/- 2 * (0.0501) = $0.30 - $0.50
My risk adjusted rate of return used in the model is 15% (higher than I normally have used because well risk went up in last 6 months).


That's just my opinion though.