Seeing Machines Limited (LON:SEE) Analysts Just Trimmed Their Revenue Forecasts By 17%

Market forces rained on the parade of Seeing Machines Limited (LON:SEE) shareholders today, when the analysts downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the latest consensus from Seeing Machines' four analysts is for revenues of AU$68m in 2023, which would reflect a notable 8.2% improvement in sales compared to the last 12 months. Losses are expected to increase substantially, hitting AU$0.0059 per share. However, before this estimates update, the consensus had been expecting revenues of AU$82m and AU$0.0052 per share in losses. 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 Seeing Machines

There was no major change to the consensus price target of AU$0.29, 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. There are some variant perceptions on Seeing Machines, with the most bullish analyst valuing it at AU$0.24 and the most bearish at AU$0.098 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 Seeing Machines 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 Seeing Machines' revenue growth is expected to slow, with the forecast 8.2% annualised growth rate until the end of 2023 being well below the historical 16% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.8% annually. Even after the forecast slowdown in growth, it seems obvious that Seeing Machines 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 this year, suggesting all may not be well at Seeing Machines. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Seeing Machines after today.

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 Seeing Machines 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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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.