Electro Optic Systems Holdings Limited (ASX:EOS) Analysts Just Slashed This Year's Revenue Estimates By 17%

The latest analyst coverage could presage a bad day for Electro Optic Systems Holdings Limited (ASX:EOS), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the consensus from Electro Optic Systems Holdings' dual analysts is for revenues of AU$194m in 2022, which would reflect a not inconsiderable 8.7% decline in sales compared to the last year of performance. Prior to the latest estimates, the analysts were forecasting revenues of AU$235m in 2022. It looks like forecasts have become a fair bit less optimistic on Electro Optic Systems Holdings, given the substantial drop in revenue estimates.

See our latest analysis for Electro Optic Systems Holdings

The consensus price target fell 16% to AU$2.38, with the analysts clearly less optimistic about Electro Optic Systems Holdings' 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. Currently, the most bullish analyst values Electro Optic Systems Holdings at AU$3.50 per share, while the most bearish prices it at AU$1.25. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 8.7% by the end of 2022. This indicates a significant reduction from annual growth of 40% 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 9.3% annually for the foreseeable future. It's pretty clear that Electro Optic Systems Holdings' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth 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 Electro Optic Systems Holdings' future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Electro Optic Systems Holdings after today.

Unanswered questions? At least one of Electro Optic Systems Holdings' dual analysts has provided estimates out to 2024, which can be seen for free on our platform here.

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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.