AudioEye, Inc. (NASDAQ:AEYE) Analysts Are Reducing Their Forecasts For This Year

The latest analyst coverage could presage a bad day for AudioEye, Inc. (NASDAQ:AEYE), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the current consensus from AudioEye's three analysts is for revenues of US$25m in 2021 which - if met - would reflect a solid 9.1% increase on its sales over the past 12 months. Losses are supposed to balloon 35% to US$1.15 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$31m and losses of US$0.99 per share in 2021. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for AudioEye

The consensus price target fell 40% to US$18.00, implicitly signalling that lower earnings per share are a leading indicator for AudioEye's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic AudioEye analyst has a price target of US$20.00 per share, while the most pessimistic values it at US$16.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting AudioEye is an easy business to forecast or the underlying assumptions are obvious.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the AudioEye's past performance and to peers in the same industry. We would highlight that AudioEye's revenue growth is expected to slow, with the forecast 19% annualised growth rate until the end of 2021 being well below the historical 55% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 14% per year. Even after the forecast slowdown in growth, it seems obvious that AudioEye is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better 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 AudioEye.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with AudioEye, including recent substantial insider selling. For more information, you can click here to discover this and the 4 other risks we've identified.

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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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.
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