Need To Know: Analysts Just Made A Substantial Cut To Their Electro Optic Systems Holdings Limited (ASX:EOS) Estimates

The analysts covering Electro Optic Systems Holdings Limited (ASX:EOS) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. Investors however, have been notably more optimistic about Electro Optic Systems Holdings recently, with the stock price up a notable 26% to AU$10.37 in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

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After the downgrade, the four analysts covering Electro Optic Systems Holdings are now predicting revenues of AU$120m in 2025. If met, this would reflect a modest 4.3% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 86% to AU$0.05 per share. Prior to this update, the analysts had been forecasting revenues of AU$161m and earnings per share (EPS) of AU$0.24 in 2025. So we can see that the consensus has become notably more bearish on Electro Optic Systems Holdings' outlook with these numbers, making a pretty serious reduction to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

See our latest analysis for Electro Optic Systems Holdings

The consensus price target lifted 94% to AU$8.44, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer term.

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. For example, we noticed that Electro Optic Systems Holdings' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 8.9% growth to the end of 2025 on an annualised basis. That is well above its historical decline of 5.1% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 11% per year. So although Electro Optic Systems Holdings' revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Electro Optic Systems Holdings dropped from profits to a loss this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Electro Optic Systems Holdings' revenues are expected to grow slower than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of Electro Optic Systems Holdings.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Electro Optic Systems Holdings going out to 2027, and you can see them 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.