Downgrade: Here's How Analysts See Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC) Performing In The Near Term

Today is shaping up negative for Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the latest downgrade, the current consensus, from the five analysts covering Kulicke and Soffa Industries, is for revenues of US$847m in 2023, which would reflect a sizeable 44% reduction in Kulicke and Soffa Industries' sales over the past 12 months. Statutory earnings per share are supposed to plunge 79% to US$1.56 in the same period. Previously, the analysts had been modelling revenues of US$1.1b and earnings per share (EPS) of US$3.44 in 2023. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a large cut to earnings per share numbers as well.

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Analysts made no major changes to their price target of US$55.00, suggesting the downgrades are not expected to have a long-term impact on Kulicke and Soffa Industries' valuation. 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 Kulicke and Soffa Industries at US$60.00 per share, while the most bearish prices it at US$45.00. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Kulicke and Soffa Industries' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 44% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 18% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Kulicke and Soffa Industries is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Kulicke and Soffa Industries' revenues are expected to grow slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Kulicke and Soffa Industries after the downgrade.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Kulicke and Soffa Industries going out to 2024, 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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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.