The Consensus EPS Estimates For Sequans Communications S.A. (NYSE:SQNS) Just Fell Dramatically

Market forces rained on the parade of Sequans Communications S.A. (NYSE:SQNS) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the consensus from four analysts covering Sequans Communications is for revenues of US$58m in 2023, implying a measurable 3.8% decline in sales compared to the last 12 months. Losses are supposed to balloon 244% to US$0.64 per share. However, before this estimates update, the consensus had been expecting revenues of US$67m and US$0.31 per share in losses. 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.

See our latest analysis for Sequans Communications

The consensus price target fell 12% to US$7.38, implicitly signalling that lower earnings per share are a leading indicator for Sequans Communications' valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Sequans Communications at US$10.50 per share, while the most bearish prices it at US$5.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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 3.8% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 8.1% 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 8.2% per year. It's pretty clear that Sequans Communications' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Sequans Communications. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Sequans Communications' 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 Sequans Communications.

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 Sequans Communications' financials, such as a short cash runway. For more information, you can click here to discover this and the 2 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.