Need To Know: Analysts Just Made A Substantial Cut To Their mCloud Technologies Corp. (CVE:MCLD) Estimates

The latest analyst coverage could presage a bad day for mCloud Technologies Corp. (CVE:MCLD), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the three analysts covering mCloud Technologies are now predicting revenues of CA$45m in 2022. If met, this would reflect a major 40% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 37% to CA$1.97. However, before this estimates update, the consensus had been expecting revenues of CA$54m and CA$0.93 per share in losses. 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.

See our latest analysis for mCloud Technologies

There was no major change to the consensus price target of CA$13.67, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic mCloud Technologies analyst has a price target of CA$19.50 per share, while the most pessimistic values it at CA$9.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that mCloud Technologies' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 31% growth on an annualised basis. This is compared to a historical growth rate of 60% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% annually. So it's pretty clear that, while mCloud Technologies' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better 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 next year, we wouldn't be surprised if investors were a bit wary of mCloud Technologies.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with mCloud Technologies' financials, such as a short cash runway. For more information, you can click here to discover this and the 4 other concerns we've identified.

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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.