What You Need To Know About The Sarcos Technology and Robotics Corporation (NASDAQ:STRC) Analyst Downgrade Today

Today is shaping up negative for Sarcos Technology and Robotics Corporation (NASDAQ:STRC) shareholders, with the analysts delivering a substantial negative revision to this 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 latest consensus from Sarcos Technology and Robotics' three analysts is for revenues of US$28m in 2023, which would reflect a substantial 93% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$34m of revenue in 2023. It looks like forecasts have become a fair bit less optimistic on Sarcos Technology and Robotics, given the measurable cut to revenue estimates.

See our latest analysis for Sarcos Technology and Robotics

The consensus price target fell 9.4% to US$4.83, with the analysts clearly less optimistic about Sarcos Technology and Robotics' valuation following this update. 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. Currently, the most bullish analyst values Sarcos Technology and Robotics at US$8.50 per share, while the most bearish prices it at US$2.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. 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. The analysts are definitely expecting Sarcos Technology and Robotics' growth to accelerate, with the forecast 93% annualised growth to the end of 2023 ranking favourably alongside historical growth of 1.2% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.9% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Sarcos Technology and Robotics is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. Analysts also expect revenues to grow faster 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 Sarcos Technology and Robotics' future valuation. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Sarcos Technology and Robotics after today.

Hungry for more information? At least one of Sarcos Technology and Robotics' three analysts has provided estimates out to 2025, which can be seen for 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.