Need To Know: Analysts Just Made A Substantial Cut To Their M3 Technology Inc. (TWSE:6799) Estimates

The latest analyst coverage could presage a bad day for M3 Technology Inc. (TWSE:6799), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the latest downgrade, M3 Technology's three analysts currently expect revenues in 2024 to be NT$1.0b, approximately in line with the last 12 months. Statutory earnings per share are supposed to shrink 6.8% to NT$4.96 in the same period. Previously, the analysts had been modelling revenues of NT$1.2b and earnings per share (EPS) of NT$6.42 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

Check out our latest analysis for M3 Technology

It'll come as no surprise then, to learn that the analysts have cut their price target 18% to NT$168.

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. We would highlight that sales are expected to reverse, with a forecast 0.7% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 5.1% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 12% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - M3 Technology is expected to lag the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for M3 Technology. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower 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 M3 Technology.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with M3 Technology's business, like concerns around earnings quality. For more information, you can click here to discover this and the 3 other concerns we've identified.

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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.