Mips AB (publ) (STO:MIPS) Analysts Just Slashed Next Year's Estimates

Market forces rained on the parade of Mips AB (publ) (STO:MIPS) shareholders today, when the analysts downgraded their forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the latest consensus from Mips' five analysts is for revenues of kr521m in 2024, which would reflect a major 40% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 133% to kr5.90. Before this latest update, the analysts had been forecasting revenues of kr545m and earnings per share (EPS) of kr6.40 in 2024. It's pretty clear that analyst sentiment has fallen after the recent consensus updates, leading to lower revenue forecasts and a small dip in earnings per share estimates.

View our latest analysis for Mips

Despite the cuts to forecast earnings, there was no real change to the kr361 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

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. It's clear from the latest estimates that Mips' rate of growth is expected to accelerate meaningfully, with the forecast 31% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 21% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.4% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Mips to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected next year, we wouldn't be surprised if investors were a bit wary of Mips.

That said, the analysts might have good reason to be negative on Mips, given its declining profit margins. Learn more, and discover the 2 other flags we've identified, 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.

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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.