Stock Analysis

News Flash: 6 Analysts Think Telos Corporation (NASDAQ:TLS) Earnings Are Under Threat

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One thing we could say about the analysts on Telos Corporation (NASDAQ:TLS) - 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 the analysts have soured majorly on the business.

After the downgrade, the consensus from Telos' six analysts is for revenues of US$127m in 2023, which would reflect a painful 41% decline in sales compared to the last year of performance. Per-share losses are expected to explode, reaching US$1.03 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$186m and losses of US$0.65 per share in 2023. 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.

Check out our latest analysis for Telos

NasdaqGM:TLS Earnings and Revenue Growth March 18th 2023

The consensus price target fell 40% to US$3.13, implicitly signalling that lower earnings per share are a leading indicator for Telos' 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 Telos at US$5.00 per share, while the most bearish prices it at US$2.25. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Telos' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 41% by the end of 2023. This indicates a significant reduction from annual growth of 15% 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 12% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Telos is expected to lag 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, and industry data suggests that Telos' revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Telos, including dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 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.

What are the risks and opportunities for Telos?

Telos Corporation, together with its subsidiaries, provides cyber, cloud, and enterprise security solutions worldwide.

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  • Earnings are forecast to decline by an average of 6.7% per year for the next 3 years

  • Shareholders have been diluted in the past year

  • Volatile share price over the past 3 months

  • Currently unprofitable and not forecast to become profitable over the next 3 years

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