FTC Solar, Inc. (NASDAQ:FTCI) Analysts Just Trimmed Their Revenue Forecasts By 10%

One thing we could say about the analysts on FTC Solar, Inc. (NASDAQ:FTCI) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the latest consensus from FTC Solar's eight analysts is for revenues of US$296m in 2023, which would reflect a substantial 141% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 61% to US$0.36. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$330m and losses of US$0.34 per share in 2023. 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 FTC Solar

There was no major change to the consensus price target of US$4.94, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on FTC Solar, with the most bullish analyst valuing it at US$9.00 and the most bearish at US$3.00 per share. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that FTC Solar's rate of growth is expected to accelerate meaningfully, with the forecast 141% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 16% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 8.9% 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 note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at FTC Solar. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on FTC Solar after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple FTC Solar analysts - going out to 2025, 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.

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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.