Time To Worry? Analysts Just Downgraded Their Electro Optic Systems Holdings Limited (ASX:EOS) Outlook

Today is shaping up negative for Electro Optic Systems Holdings Limited (ASX:EOS) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the consensus from dual analysts covering Electro Optic Systems Holdings is for revenues of AU$165m in 2022, implying a noticeable 2.0% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of AU$194m in 2022. It looks like forecasts have become a fair bit less optimistic on Electro Optic Systems Holdings, given the measurable cut to revenue estimates.

Check out our latest analysis for Electro Optic Systems Holdings

Additionally, the consensus price target for Electro Optic Systems Holdings increased 47% to AU$3.50, showing a clear increase in optimism from the analysts involved.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with a forecast 4.0% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 32% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 9.7% per year. 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. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Electro Optic Systems Holdings going forwards.

Of course, there's always more to the story. 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.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.