These Analysts Think SMART Global Holdings, Inc.'s (NASDAQ:SGH) Earnings Are Under Threat

The latest analyst coverage could presage a bad day for SMART Global Holdings, Inc. (NASDAQ:SGH), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. 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 five analysts covering SMART Global Holdings provided consensus estimates of US$1.2b revenue in 2024, which would reflect a considerable 17% 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$0.45 per share in 2024. Prior to this update, the analysts had been forecasting revenues of US$1.7b and earnings per share (EPS) of US$1.03 in 2024. There looks to have been a major change in sentiment regarding SMART Global Holdings' prospects, with a pretty serious reduction to revenues and the analysts now forecasting a loss instead of a profit.

View our latest analysis for SMART Global Holdings

The consensus price target fell 21% to US$26.17, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 17% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 8.7% 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 15% per year. It's pretty clear that SMART Global Holdings' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for SMART Global Holdings dropped from profits to a loss this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that SMART Global Holdings' revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of SMART Global Holdings.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with SMART Global Holdings' financials, such as dilutive stock issuance over the past year. For more information, you can click here to discover this and the 5 other flags we've identified.

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.