Time To Worry? Analysts Just Downgraded Their Kornit Digital Ltd. (NASDAQ:KRNT) Outlook

Today is shaping up negative for Kornit Digital Ltd. (NASDAQ:KRNT) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. 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 current consensus from Kornit Digital's six analysts is for revenues of US$245m in 2024 which - if met - would reflect a notable 8.3% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 79% to US$0.33. However, before this estimates update, the consensus had been expecting revenues of US$290m and US$0.27 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Kornit Digital

The consensus price target fell 12% to US$26.17, implicitly signalling that lower earnings per share are a leading indicator for Kornit Digital's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Kornit Digital's past performance and to peers in the same industry. We would highlight that Kornit Digital's revenue growth is expected to slow, with the forecast 6.6% annualised growth rate until the end of 2024 being well below the historical 14% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.7% per year. So it's pretty clear that, while Kornit Digital's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Kornit Digital's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Kornit Digital after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Kornit Digital going out to 2025, and you can see them 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.

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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.