Analysts Just Slashed Their Li-Cycle Holdings Corp. (NYSE:LICY) EPS Numbers

The latest analyst coverage could presage a bad day for Li-Cycle Holdings Corp. (NYSE:LICY), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the current consensus from Li-Cycle Holdings' seven analysts is for revenues of US$136m in 2023 which - if met - would reflect a sizeable increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 78% to US$0.28. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$185m and losses of US$0.20 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 Li-Cycle Holdings

The consensus price target fell 12% to US$10.11, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Li-Cycle Holdings, with the most bullish analyst valuing it at US$13.00 and the most bearish at US$8.00 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Li-Cycle Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 5x annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 103% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.9% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Li-Cycle Holdings is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. With a serious cut to next year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Li-Cycle Holdings.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Li-Cycle Holdings analysts - going out to 2024, 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.