Time To Worry? Analysts Are Downgrading Their Clean Energy Fuels Corp. (NASDAQ:CLNE) Outlook

Market forces rained on the parade of Clean Energy Fuels Corp. (NASDAQ:CLNE) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

After the downgrade, the consensus from Clean Energy Fuels' six analysts is for revenues of US$394m in 2023, which would reflect a perceptible 6.1% decline in sales compared to the last year of performance. Losses are supposed to balloon 63% to US$0.43 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$498m and losses of US$0.32 per share in 2023. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Clean Energy Fuels

The consensus price target fell 19% to US$10.69, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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 Clean Energy Fuels analyst has a price target of US$22.00 per share, while the most pessimistic values it at US$7.00. 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. 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.

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. Over the past five years, revenues have declined around 1.3% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 6.1% decline in revenue until the end of 2023. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to decline 6.3% annually. So it's pretty clear that, while it does have declining revenues, Clean Energy Fuels is expected to suffer at about the same rate as its industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately they also trimmed their revenue estimates, although the company is expected to perform at about the same rate as the wider market this year. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Clean Energy Fuels analysts - 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.

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.