Bearish: Analysts Just Cut Their Ceres Power Holdings plc (LON:CWR) Revenue and EPS estimates

The analysts covering Ceres Power Holdings plc (LON:CWR) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. 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 downgrade, the consensus from eleven analysts covering Ceres Power Holdings is for revenues of UK£23m in 2023, implying a perceptible 4.4% decline in sales compared to the last 12 months. Losses are expected to increase slightly, to UK£0.27 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of UK£31m and losses of UK£0.25 per share in 2023. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Ceres Power Holdings

The consensus price target fell 7.7% to UK£5.68, implicitly signalling that lower earnings per share are a leading indicator for Ceres Power Holdings' valuation.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 8.6% by the end of 2023. This indicates a significant reduction from annual growth of 17% 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 18% annually for the foreseeable future. It's pretty clear that Ceres Power Holdings' revenues are expected to perform substantially worse than the wider 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 Ceres Power Holdings. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Ceres Power Holdings.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Ceres Power Holdings analysts - going out to 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.

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