Bearish: Analysts Just Cut Their Synaptics Incorporated (NASDAQ:SYNA) Revenue and EPS estimates

Market forces rained on the parade of Synaptics Incorporated (NASDAQ:SYNA) shareholders today, when the analysts downgraded their forecasts for next year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the nine analysts covering Synaptics provided consensus estimates of US$1.1b revenue in 2024, which would reflect a painful 29% 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$2.22 per share in 2024. Before this latest update, the analysts had been forecasting revenues of US$1.6b and earnings per share (EPS) of US$2.68 in 2024. There looks to have been a major change in sentiment regarding Synaptics' prospects, with a pretty serious reduction to revenues and the analysts now forecasting a loss instead of a profit.

Check out our latest analysis for Synaptics

The consensus price target fell 30% to US$102, implicitly signalling that lower earnings per share are a leading indicator for Synaptics' 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 Synaptics at US$130 per share, while the most bearish prices it at US$75.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Synaptics shareholders.

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. We would highlight that sales are expected to reverse, with a forecast 24% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 0.8% 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 12% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Synaptics is expected to lag the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Synaptics dropped from profits to a loss next year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Synaptics' revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Synaptics, including recent substantial insider selling. Learn more, and discover the 1 other flag we've identified, for free on our platform here.

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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.