Bearish: Analysts Just Cut Their AutoWeb, Inc. (NASDAQ:AUTO) Revenue and EPS estimates

The latest analyst coverage could presage a bad day for AutoWeb, Inc. (NASDAQ:AUTO), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the three analysts covering AutoWeb provided consensus estimates of US$66m revenue in 2022, which would reflect an uneasy 8.9% decline on its sales over the past 12 months. Losses are expected to increase substantially, hitting US$0.85 per share. However, before this estimates update, the consensus had been expecting revenues of US$86m and US$0.68 per share in losses. 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.

Check out our latest analysis for AutoWeb

The consensus price target fell 69% to US$1.38, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. There are some variant perceptions on AutoWeb, with the most bullish analyst valuing it at US$1.50 and the most bearish at US$1.25 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would also point out that the forecast 12% annualised revenue decline to the end of 2022 is better than the historical trend, which saw revenues shrink 17% annually over the past five years By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 13% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect AutoWeb to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that AutoWeb's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of AutoWeb.

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 AutoWeb's financials, such as recent substantial insider selling. Learn more, and discover the 4 other risks we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.