What Does The Future Hold For Valens Semiconductor Ltd. (NYSE:VLN)? These Analysts Have Been Cutting Their Estimates

One thing we could say about the analysts on Valens Semiconductor Ltd. (NYSE:VLN) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

After the downgrade, the five analysts covering Valens Semiconductor are now predicting revenues of US$99m in 2023. If met, this would reflect a decent 9.1% improvement in sales compared to the last 12 months. The loss per share is expected to ameliorate slightly, reducing to US$0.25. However, before this estimates update, the consensus had been expecting revenues of US$111m and US$0.23 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.

View our latest analysis for Valens Semiconductor

The consensus price target was broadly unchanged at US$8.60, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the 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. The most optimistic Valens Semiconductor analyst has a price target of US$13.00 per share, while the most pessimistic values it at US$6.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Valens Semiconductor's past performance and to peers in the same industry. We would highlight that Valens Semiconductor's revenue growth is expected to slow, with the forecast 9.1% annualised growth rate until the end of 2023 being well below the historical 19% p.a. growth over the last three years. Compare this to the 124 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 9.7% per year. So it's pretty clear that, while Valens Semiconductor's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. 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 Valens Semiconductor after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Valens Semiconductor analysts - going out to 2025, 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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