Bearish: Analysts Just Cut Their FTC Solar, Inc. (NASDAQ:FTCI) Revenue and EPS estimates

Today is shaping up negative for FTC Solar, Inc. (NASDAQ:FTCI) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the latest consensus from FTC Solar's eight analysts is for revenues of US$434m in 2022, which would reflect a sizeable 104% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 94% to US$0.064. Before this latest update, the analysts had been forecasting revenues of US$537m and earnings per share (EPS) of US$0.076 in 2022. There looks to have been a major change in sentiment regarding FTC Solar's prospects, with a substantial drop in revenues and the analysts now forecasting a loss instead of a profit.

See our latest analysis for FTC Solar

The consensus price target fell 34% to US$8.31, implicitly signalling that lower earnings per share are a leading indicator for FTC Solar's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values FTC Solar at US$12.00 per share, while the most bearish prices it at US$4.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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 FTC Solar's rate of growth is expected to accelerate meaningfully, with the forecast 77% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 39% over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.9% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that FTC Solar is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts are expecting FTC Solar to become unprofitable next year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. With a serious cut to next year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of FTC Solar.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for FTC Solar going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.