Smith Micro Software, Inc. (NASDAQ:SMSI) Just Reported And Analysts Have Been Cutting Their Estimates

There's been a major selloff in Smith Micro Software, Inc. (NASDAQ:SMSI) shares in the week since it released its annual report, with the stock down 40% to US$0.49. Revenues came in at US$41m, in line with expectations, while statutory losses per share were substantially higher than expected, at US$0.38 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Smith Micro Software

Following the recent earnings report, the consensus from dual analysts covering Smith Micro Software is for revenues of US$30.4m in 2024. This implies a painful 26% decline in revenue compared to the last 12 months. Losses are expected to increase substantially, hitting US$0.36 per share. Before this latest report, the consensus had been expecting revenues of US$39.6m and US$0.20 per share in losses. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The consensus price target fell 18% to US$2.58, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 26% by the end of 2024. This indicates a significant reduction from annual growth of 6.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 12% annually for the foreseeable future. It's pretty clear that Smith Micro Software's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

We don't want to rain on the parade too much, but we did also find 4 warning signs for Smith Micro Software (1 can't be ignored!) that you need to be mindful of.

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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.