Analysts Just Shaved Their The Lion Electric Company (TSE:LEV) Forecasts Dramatically

One thing we could say about the analysts on The Lion Electric Company (TSE:LEV) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the downgrade, the most recent consensus for Lion Electric from its eight analysts is for revenues of US$249m in 2025 which, if met, would be a huge 41% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 48% to US$0.30. Yet before this consensus update, the analysts had been forecasting revenues of US$288m and losses of US$0.26 per share in 2025. 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 Lion Electric

The consensus price target fell 38% to US$0.77, implicitly signalling that lower earnings per share are a leading indicator for Lion Electric's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Lion Electric, with the most bullish analyst valuing it at US$1.00 and the most bearish at US$0.54 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Lion Electric shareholders.

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 Lion Electric's revenue growth is expected to slow, with the forecast 32% annualised growth rate until the end of 2025 being well below the historical 47% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 8.2% per year. Even after the forecast slowdown in growth, it seems obvious that Lion Electric is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Lion Electric. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

There might be good reason for analyst bearishness towards Lion Electric, like a short cash runway. Learn more, and discover the 3 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 with high insider ownership.

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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.