Need To Know: This Analyst Just Made A Substantial Cut To Their Smart Eye AB (publ) (STO:SEYE) Estimates

Market forces rained on the parade of Smart Eye AB (publ) (STO:SEYE) shareholders today, when the covering analyst downgraded their forecasts for this year. 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.

After the downgrade, the solo analyst covering Smart Eye is now predicting revenues of kr309m in 2022. If met, this would reflect a huge 182% improvement in sales compared to the last 12 months. Per-share losses are expected to creep up to kr6.20. However, before this estimates update, the consensus had been expecting revenues of kr391m and kr3.98 per share in losses. 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.

View our latest analysis for Smart Eye

The consensus price target fell 5.7% to kr330, implicitly signalling that lower earnings per share are a leading indicator for Smart Eye's valuation.

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 clear from the latest estimates that Smart Eye's rate of growth is expected to accelerate meaningfully, with the forecast 182% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 15% 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 9.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Smart Eye is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analyst increased their loss per share estimates for this year. While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Smart Eye.

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 2024, 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.

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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.