The Consensus EPS Estimates For REC Silicon ASA (OB:RECSI) Just Fell A Lot

Today is shaping up negative for REC Silicon ASA (OB:RECSI) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

After this downgrade, REC Silicon's lone analyst is now forecasting revenues of US$206m in 2024. This would be a huge 33% improvement in sales compared to the last 12 months. Losses are supposed to balloon 1,205% to US$0.36 per share. Yet before this consensus update, the analyst had been forecasting revenues of US$235m and losses of US$0.32 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a serious cut to their revenue forecasts while also expecting losses per share to increase.

Check out our latest analysis for REC Silicon

The consensus price target fell 24% to kr13.00, implicitly signalling that lower earnings per share are a leading indicator for REC Silicon's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the REC Silicon's past performance and to peers in the same industry. For example, we noticed that REC Silicon's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 76% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 0.9% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 15% per year. So it looks like REC Silicon is expected to grow faster than its competitors, at least for a while.

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 REC Silicon. While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of REC Silicon.

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 2026, which can be seen 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 backed by insiders.

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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.