Need To Know: Analysts Just Made A Substantial Cut To Their Core Lithium Ltd (ASX:CXO) Estimates

The latest analyst coverage could presage a bad day for Core Lithium Ltd (ASX:CXO), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After this downgrade, Core Lithium's nine analysts are now forecasting revenues of AU$250m in 2024. This would be a huge 394% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 221% to AU$0.016. Previously, the analysts had been modelling revenues of AU$284m and earnings per share (EPS) of AU$0.025 in 2024. Indeed, we can see that the analysts are a lot more bearish about Core Lithium's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Core Lithium

The consensus price target fell 15% to AU$0.19, with the weaker earnings outlook clearly leading analyst valuation estimates.

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. It's clear from the latest estimates that Core Lithium's rate of growth is expected to accelerate meaningfully, with the forecast 4x annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 105% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Core Lithium is expected to grow much faster than its industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Core Lithium. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Core Lithium.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Core Lithium, including concerns around earnings quality. Learn more, and discover the 2 other risks we've identified, 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.