Analysts Just Slashed Their MP Materials Corp. (NYSE:MP) Earnings Forecasts

Market forces rained on the parade of MP Materials Corp. (NYSE:MP) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. At US$15.47, shares are up 5.2% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After this downgrade, MP Materials' seven analysts are now forecasting revenues of US$260m in 2024. This would be a reasonable 2.7% improvement in sales compared to the last 12 months. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of US$0.092 per share in 2024. Prior to this update, the analysts had been forecasting revenues of US$385m and earnings per share (EPS) of US$0.36 in 2024. There looks to have been a major change in sentiment regarding MP Materials' prospects, with a sizeable cut to revenues and the analysts now forecasting a loss instead of a profit.

View our latest analysis for MP Materials

The consensus price target fell 5.6% to US$26.70, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that MP Materials' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 2.7% growth on an annualised basis. This is compared to a historical growth rate of 33% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.0% annually. Factoring in the forecast slowdown in growth, it seems obvious that MP Materials is also expected to grow slower than other industry participants.

The Bottom Line

The biggest low-light for us was that the forecasts for MP Materials dropped from profits to a loss this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that MP Materials' revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of MP Materials.

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 MP Materials' financials, such as its declining profit margins. Learn more, and discover the 1 other risk we've identified, 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.