HORIZONS | BDO'S GLOBAL VIEWOF MIDMARKET DEAL ACTIVITY 05
THE PATHAHEAD...RECOVERY PICKSUP STEAM ANALYSIS OF ESTIMATES FOR INSIGHTS ONTHE ECONOMIC RECOVERY
More than a year into the COVID-19 pandemic, industry recoveries are solidifying. Hindsight, along with the narrowing of analyst estimates and continued reductions in 'surprises,' have provided a clearer and more optimistic picture of the path ahead for many industries. What do those recovery curves look like now? Are there potential explanations for the disconnect between forecasted fundamentals and equity prices?
To bring visual clarity to these questions and more, BDO USA’s Valuation & Business Analytics practice released our latest Forecast Engine Industry Impact Study earlier this year. We utilized our proprietary Forecast Engine tool to help analyze over 20,000 estimates for 419 public companies spread across 24 industries This Forecast Engine takes thousands of market data points and transforms them into useful metrics and in sights with applications in various strategic, financial planning and analysis, and report ing and compliance functions. Analyzing the results by industry continues to show stark differences, both in terms of near-term impacts as well as the timing and extent of recovery. Although a decline in revenues and profits is to be expected for certain industries, the magnitude of the reductions and long-term impact conveyed by analyst estimates is still severe for more than a few industries.
Due to operating leverage differences between industries, the impacts to profitability are disparate.
ANTHONY ALFONSO GLOBAL VALUATION LEADER
aalfonso@bdo.com
(1) While this article highlights certain industry level data, for more detailed information for each industry please see the Study in its en tirety: https://www.bdo.com/insights/business-financial-advisory/valuation-business-analytics/vba-forecast-engine-impact-study-issue- 4).
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