Things Look Grim For Pioneer Power Solutions, Inc. (NASDAQ:PPSI) After Today's Downgrade

One thing we could say about the analysts on Pioneer Power Solutions, Inc. (NASDAQ:PPSI) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the latest consensus from Pioneer Power Solutions' two analysts is for revenues of US$53m in 2024, which would reflect a huge 25% improvement in sales compared to the last 12 months. Per-share earnings are expected to step up 17% to US$0.21. Before this latest update, the analysts had been forecasting revenues of US$61m and earnings per share (EPS) of US$0.36 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.

Check out our latest analysis for Pioneer Power Solutions

The consensus price target fell 13% to US$10.50, with the weaker earnings outlook clearly leading analyst valuation estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Pioneer Power Solutions' past performance and to peers in the same industry. The analysts are definitely expecting Pioneer Power Solutions' growth to accelerate, with the forecast 25% annualised growth to the end of 2024 ranking favourably alongside historical growth of 4.5% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Pioneer Power Solutions to grow faster than 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 Pioneer Power Solutions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better 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 Pioneer Power Solutions.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Pioneer Power Solutions' financials, such as concerns around earnings quality. Learn more, and discover the 2 other concerns we've identified, for 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.