Analysts Are More Bearish On Pilbara Minerals Limited (ASX:PLS) Than They Used To Be

Today is shaping up negative for Pilbara Minerals Limited (ASX:PLS) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the consensus from 15 analysts covering Pilbara Minerals is for revenues of AU$2.4b in 2024, implying a substantial 41% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to tumble 53% to AU$0.37 in the same period. Previously, the analysts had been modelling revenues of AU$2.8b and earnings per share (EPS) of AU$0.44 in 2024. Indeed, we can see that the analysts are a lot more bearish about Pilbara Minerals' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Pilbara Minerals

Despite the cuts to forecast earnings, there was no real change to the AU$4.74 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 41% by the end of 2024. This indicates a significant reduction from annual growth of 82% 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 2.6% per year. It's pretty clear that Pilbara Minerals' revenues are expected to perform substantially worse than the wider 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 Pilbara Minerals. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Pilbara Minerals.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Pilbara Minerals analysts - going out to 2026, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.