One Smart Eye AB (publ) (STO:SEYE) Analyst Just Made A Major Cut To Next Year's Estimates

Today is shaping up negative for Smart Eye AB (publ) (STO:SEYE) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.

After this downgrade, Smart Eye's lone analyst is now forecasting revenues of kr250m in 2022. This would be a substantial 72% improvement in sales compared to the last 12 months. Per-share losses are expected to creep up to kr8.90. Yet prior to the latest estimates, the analyst had been forecasting revenues of kr309m and losses of kr6.20 per share in 2022. 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 29% to kr235, implicitly signalling that lower earnings per share are a leading indicator for Smart Eye's valuation.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Smart Eye's rate of growth is expected to accelerate meaningfully, with the forecast 107% 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 9.1% 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.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.