One Smart Wires Technology Ltd. (STO:GOGRID SDB) Analyst Has Been Cutting Their Forecasts

Today is shaping up negative for Smart Wires Technology Ltd. (STO:GOGRID SDB) shareholders, with the covering analyst delivering a substantial negative revision to next year's forecasts. 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 current consensus from Smart Wires Technology's lone analyst is for revenues of US$60m in 2022 which - if met - would reflect a sizeable 64% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 50% to US$0.40. However, before this estimates update, the consensus had been expecting revenues of US$69m and US$0.38 per share in losses. Ergo, there's been a clear change in sentiment, with the analyst administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out our latest analysis for Smart Wires Technology

There was no major change to the consensus price target of US$7.87, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Smart Wires Technology's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 48% growth on an annualised basis. This is compared to a historical growth rate of 169% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 33% per year. So it's pretty clear that, while Smart Wires Technology's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analyst increased their loss per share estimates for next year. While the analyst 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 Smart Wires Technology after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2023, 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 that insiders are buying.

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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