Analysts Just Made A Major Revision To Their Pixelworks, Inc. (NASDAQ:PXLW) Revenue Forecasts

The latest analyst coverage could presage a bad day for Pixelworks, Inc. (NASDAQ:PXLW), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

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After the downgrade, the three analysts covering Pixelworks are now predicting revenues of US$36m in 2025. If met, this would reflect a credible 4.6% improvement in sales compared to the last 12 months. Losses are presumed to reduce, shrinking 11% per share from last year to US$4.65. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$45m and losses of US$4.44 per share in 2025. 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.

View our latest analysis for Pixelworks

The consensus price target fell 37% to US$11.67, implicitly signalling that lower earnings per share are a leading indicator for Pixelworks' valuation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Pixelworks is forecast to grow faster in the future than it has in the past, with revenues expected to display 9.5% annualised growth until the end of 2025. If achieved, this would be a much better result than the 0.2% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 17% annually for the foreseeable future. So although Pixelworks' revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Pixelworks' future valuation. 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 Pixelworks after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Pixelworks going out to 2026, 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 with high insider ownership.

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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.