Need To Know: Analysts Just Made A Substantial Cut To Their Nordic Semiconductor ASA (OB:NOD) Estimates

Market forces rained on the parade of Nordic Semiconductor ASA (OB:NOD) shareholders today, when the analysts downgraded their forecasts for this year. 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 eight analysts covering Nordic Semiconductor, is for revenues of US$687m in 2023, which would reflect a perceptible 7.1% reduction in Nordic Semiconductor's sales over the past 12 months. Statutory earnings per share are anticipated to tumble 43% to US$0.27 in the same period. Prior to this update, the analysts had been forecasting revenues of US$765m and earnings per share (EPS) of US$0.45 in 2023. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

View our latest analysis for Nordic Semiconductor

The consensus price target fell 16% to kr143, with the weaker earnings outlook clearly leading analyst valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Nordic Semiconductor analyst has a price target of kr200 per share, while the most pessimistic values it at kr90.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 9.3% by the end of 2023. This indicates a significant reduction from annual growth of 27% 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 12% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Nordic Semiconductor 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 Nordic Semiconductor. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Nordic Semiconductor's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Nordic Semiconductor.

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 Nordic Semiconductor's financials, such as concerns around earnings quality. Learn more, and discover the 1 other concern we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.