Pilbara Minerals Limited (ASX:PLS) Analysts Just Cut Their EPS Forecasts Substantially

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 latest downgrade, the current consensus, from the 17 analysts covering Pilbara Minerals, is for revenues of AU$1.4b in 2024, which would reflect a stressful 65% reduction in Pilbara Minerals' sales over the past 12 months. Statutory earnings per share are supposed to dive 78% to AU$0.17 in the same period. Prior to this update, the analysts had been forecasting revenues of AU$1.6b and earnings per share (EPS) of AU$0.22 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.

Check out our latest analysis for Pilbara Minerals

Despite the cuts to forecast earnings, there was no real change to the AU$3.78 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

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 65% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 82% 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 2.2% 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 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.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Pilbara Minerals going out to 2026, and you can see them 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.

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.