Eos Energy Enterprises, Inc. (NASDAQ:EOSE) Analysts Just Slashed This Year's Estimates

One thing we could say about the analysts on Eos Energy Enterprises, Inc. (NASDAQ:EOSE) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Surprisingly the share price has been buoyant, rising 25% to US$2.99 in the past 7 days. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

Following the downgrade, the current consensus from Eos Energy Enterprises' seven analysts is for revenues of US$29m in 2023 which - if met - would reflect a sizeable 64% increase on its sales over the past 12 months. Losses are expected to increase slightly, to US$2.62 per share. However, before this estimates update, the consensus had been expecting revenues of US$43m and US$1.92 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Eos Energy Enterprises

The consensus price target lifted 5.5% to US$5.58, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer term.

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. The analysts are definitely expecting Eos Energy Enterprises' growth to accelerate, with the forecast 171% annualised growth to the end of 2023 ranking favourably alongside historical growth of 101% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.6% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Eos Energy Enterprises is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The increasing price target is not intuitively what we would expect to see, given these downgrades, and we'd suggest shareholders revisit their investment thesis before making a decision.

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 Eos Energy Enterprises' business, like a short cash runway. For more information, you can click here to discover this and the 1 other warning sign we've identified.

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.