Credo Technology Group Holding Ltd Just Beat EPS By 300%: Here's What Analysts Think Will Happen Next

Credo Technology Group Holding Ltd (NASDAQ:CRDO) just released its latest quarterly results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 2.4% to hit US$54m. Credo Technology Group Holding also reported a statutory profit of US$0.02, which was an impressive 300% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Credo Technology Group Holding

Taking into account the latest results, the nine analysts covering Credo Technology Group Holding provided consensus estimates of US$183.1m revenue in 2024, which would reflect a discernible 3.4% decline on its sales over the past 12 months. Losses are forecast to balloon 194% to US$0.12 per share. Before this earnings announcement, the analysts had been modelling revenues of US$184.0m and losses of US$0.10 per share in 2024. While next year's revenue estimates held steady, there was also a noticeable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The consensus price target fell 27% to US$13.78per share, with the analysts clearly concerned by ballooning losses. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Credo Technology Group Holding at US$16.00 per share, while the most bearish prices it at US$11.00. This shows there is still a bit of 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 2.7% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 51% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.7% annually for the foreseeable future. It's pretty clear that Credo Technology Group Holding's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Credo Technology Group Holding. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Credo Technology Group Holding. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Credo Technology Group Holding going out to 2025, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Credo Technology Group Holding , and understanding these should be part of your investment process.

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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.