Some Analysts Just Cut Their CEVA, Inc. (NASDAQ:CEVA) Estimates

The latest analyst coverage could presage a bad day for CEVA, Inc. (NASDAQ:CEVA), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. 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 consensus from CEVA's five analysts is for revenues of US$102m in 2024, which would reflect a considerable 14% decline in sales compared to the last year of performance. Losses are predicted to fall substantially, shrinking 37% to US$0.40 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$126m and losses of US$0.31 per share in 2024. 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.

Check out our latest analysis for CEVA

The consensus price target fell 8.0% to US$24.57, implicitly signalling that lower earnings per share are a leading indicator for CEVA's valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 11% by the end of 2024. This indicates a significant reduction from annual growth of 12% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 16% per year. It's pretty clear that CEVA's revenues are expected to perform substantially 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 next year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that CEVA's revenues are expected to grow slower 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. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on CEVA after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple CEVA 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.

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