Nexteq plc (LON:NXQ) Analysts Just Cut Their EPS Forecasts Substantially

The latest analyst coverage could presage a bad day for Nexteq plc (LON:NXQ), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the two analysts covering Nexteq, is for revenues of US$95m in 2024, which would reflect an uncomfortable 17% reduction in Nexteq's sales over the past 12 months. Statutory earnings per share are supposed to plunge 45% to US$0.091 in the same period. Previously, the analysts had been modelling revenues of US$115m and earnings per share (EPS) of US$0.16 in 2024. Indeed, we can see that the analysts are a lot more bearish about Nexteq's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Nexteq

The consensus price target fell 30% to US$2.45, with the weaker earnings outlook clearly leading analyst valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Nexteq, with the most bullish analyst valuing it at US$2.58 and the most bearish at US$2.32 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Nexteq's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 17% by the end of 2024. This indicates a significant reduction from annual growth of 4.7% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.0% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Nexteq is expected to lag the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Nexteq. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Nexteq's revenues are expected to grow slower 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.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2025, which can be seen 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.

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