One Smartoptics Group AS (OB:SMOP) Analyst Just Cut Their EPS Forecasts

One thing we could say about the covering analyst on Smartoptics Group AS (OB:SMOP) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the most recent consensus for Smartoptics Group from its solitary analyst is for revenues of US$54m in 2024 which, if met, would be a reasonable 2.7% increase on its sales over the past 12 months. Per-share earnings are expected to rise 3.3% to US$0.041. Before this latest update, the analyst had been forecasting revenues of US$74m and earnings per share (EPS) of US$0.094 in 2024. Indeed, we can see that the analyst is a lot more bearish about Smartoptics Group's prospects, administering a sizeable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Smartoptics Group

The analyst made no major changes to their price target of US$1.92, suggesting the downgrades are not expected to have a long-term impact on Smartoptics Group's valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Smartoptics Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 5.4% growth on an annualised basis. This is compared to a historical growth rate of 7.6% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.2% annually. So it's pretty clear that, while Smartoptics Group's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Smartoptics Group. Unfortunately, the analyst also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Smartoptics Group after the downgrade.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Smartoptics Group going out as far as 2026, and you can see them free on our platform here.

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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.