Downgrade: Here's How Analysts See O2Micro International Limited (NASDAQ:OIIM) Performing In The Near Term

The analysts covering O2Micro International Limited (NASDAQ:OIIM) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the latest downgrade, the twin analysts covering O2Micro International provided consensus estimates of US$80m revenue in 2022, which would reflect an uneasy 16% decline on its sales over the past 12 months. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of US$0.03 per share in 2022. Prior to this update, the analysts had been forecasting revenues of US$96m and earnings per share (EPS) of US$0.24 in 2022. There looks to have been a major change in sentiment regarding O2Micro International's prospects, with a measurable cut to revenues and the analysts now forecasting a loss instead of a profit.

View our latest analysis for O2Micro International

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the O2Micro International's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 30% by the end of 2022. This indicates a significant reduction from annual growth of 13% 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 8.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - O2Micro International is expected to lag the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for O2Micro International dropped from profits to a loss this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that O2Micro International's revenues are expected to grow slower than the wider market. After a cut like that, investors could be forgiven for thinking analysts are a lot more bearish on O2Micro International, and a few readers might choose to steer clear of the stock.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for O2Micro International going out as far as 2023, and you can see them 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.