Some Analysts Just Cut Their ITM Power Plc (LON:ITM) Estimates

Published
May 19, 2022
AIM:ITM
Source: Shutterstock

Today is shaping up negative for ITM Power Plc (LON:ITM) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. The stock price has risen 6.5% to UK£2.99 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After this downgrade, ITM Power's 19 analysts are now forecasting revenues of UK£13m in 2022. This would be a huge 42% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing UK£15m of revenue in 2022. The consensus view seems to have become more pessimistic on ITM Power, noting the measurable cut to revenue estimates in this update.

View our latest analysis for ITM Power

earnings-and-revenue-growth
AIM:ITM Earnings and Revenue Growth May 19th 2022

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. It's clear from the latest estimates that ITM Power's rate of growth is expected to accelerate meaningfully, with the forecast 101% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 21% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 28% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that ITM Power is expected to grow much faster than its industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for ITM Power this year. They're also forecasting more rapid revenue growth than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on ITM Power after today.

Want to learn more? We have estimates for ITM Power from its 19 analysts out until 2025, 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.