Analysts Just Slashed Their Pilbara Minerals Limited (ASX:PLS) EPS Numbers

Market forces rained on the parade of Pilbara Minerals Limited (ASX:PLS) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. At AU$2.88, shares are up 5.9% in the past 7 days. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the consensus from 17 analysts covering Pilbara Minerals is for revenues of AU$863m in 2025, implying a stressful 31% decline in sales compared to the last 12 months. Statutory earnings per share are supposed to plunge 69% to AU$0.026 in the same period. Previously, the analysts had been modelling revenues of AU$990m and earnings per share (EPS) of AU$0.033 in 2025. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.

View our latest analysis for Pilbara Minerals

Analysts made no major changes to their price target of AU$3.12, suggesting the downgrades are not expected to have a long-term impact on Pilbara Minerals' valuation.

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. We would highlight that sales are expected to reverse, with a forecast 31% annualised revenue decline to the end of 2025. That is a notable change from historical growth of 57% 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 2.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Pilbara Minerals is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. 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.

That said, the analysts might have good reason to be negative on Pilbara Minerals, given its declining profit margins. Learn more, and discover the 1 other flag we've identified, for 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 backed by insiders.

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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.