Downgrade: Here's How Analysts See Arteris, Inc. (NASDAQ:AIP) Performing In The Near Term

One thing we could say about the analysts on Arteris, Inc. (NASDAQ:AIP) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After the downgrade, the six analysts covering Arteris are now predicting revenues of US$56m in 2024. If met, this would reflect a credible 7.9% improvement in sales compared to the last 12 months. Per-share losses are expected to creep up to US$1.00. Yet before this consensus update, the analysts had been forecasting revenues of US$69m and losses of US$0.74 per share in 2024. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Arteris

The consensus price target fell 17% to US$11.50, implicitly signalling that lower earnings per share are a leading indicator for Arteris' valuation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Arteris' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 6.2% growth on an annualised basis. This is compared to a historical growth rate of 10% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. Factoring in the forecast slowdown in growth, it seems obvious that Arteris is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Arteris. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Arteris' revenues are expected to grow slower than the wider market. With a serious cut to next year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Arteris.

That said, the analysts might have good reason to be negative on Arteris, given dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 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.