What You Need To Know About The Heliogen, Inc. (NYSE:HLGN) Analyst Downgrade Today

One thing we could say about the analysts on Heliogen, Inc. (NYSE:HLGN) - 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.

After the downgrade, the dual analysts covering Heliogen are now predicting revenues of US$20m in 2022. If met, this would reflect a substantial 52% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 34% to US$0.54. However, before this estimates update, the consensus had been expecting revenues of US$24m and US$0.55 per share in losses. 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 making no real change to the loss per share numbers.

See our latest analysis for Heliogen

the analysts have cut their price target 26% to US$9.42 per share, signalling that the declining revenue and ongoing losses are contributing to the lower valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Heliogen analyst has a price target of US$19.00 per share, while the most pessimistic values it at US$4.25. 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. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Heliogen's revenue growth is expected to slow, with the forecast 130% annualised growth rate until the end of 2022 being well below the historical 810% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% annually. Even after the forecast slowdown in growth, it seems obvious that Heliogen is also expected to grow faster than the wider industry.

The Bottom Line

While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Heliogen after today.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Heliogen's business, like major dilution from new stock issuance in the past year. For more information, you can click here to discover this and the 1 other risk we've identified.

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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