News Flash: 21 Analysts Think Ballard Power Systems Inc. (TSE:BLDP) Earnings Are Under Threat

One thing we could say about the analysts on Ballard Power Systems Inc. (TSE:BLDP) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the 21 analysts covering Ballard Power Systems, is for revenues of US$99m in 2022, which would reflect a perceptible 4.5% reduction in Ballard Power Systems' sales over the past 12 months. Losses are forecast to hold steady at around US$0.58. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$111m and losses of US$0.53 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

View our latest analysis for Ballard Power Systems

There was no major change to the consensus price target of US$7.81, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Ballard Power Systems, with the most bullish analyst valuing it at US$11.03 and the most bearish at US$8.91 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Ballard Power Systems is an easy business to forecast or the underlying assumptions are obvious.

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. One more thing stood out to us about these estimates, and it's the idea that Ballard Power Systems' decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 8.8% to the end of 2022. This tops off a historical decline of 1.5% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 36% per year. So while a broad number of companies are forecast to grow, unfortunately Ballard Power Systems is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Ballard Power Systems. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Ballard Power Systems' revenues are expected to grow 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 Ballard Power Systems.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Ballard Power Systems going out to 2024, 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.

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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.