Some IronNet, Inc. (NYSE:IRNT) Analysts Just Made A Major Cut To Next Year's Estimates

The latest analyst coverage could presage a bad day for IronNet, Inc. (NYSE:IRNT), 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 analysts seeing grey clouds on the horizon.

Following the downgrade, the current consensus from IronNet's four analysts is for revenues of US$42m in 2023 which - if met - would reflect a substantial 56% increase on its sales over the past 12 months. Losses are supposed to balloon 24% to US$0.84 per share. However, before this estimates update, the consensus had been expecting revenues of US$101m and US$0.74 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.

See our latest analysis for IronNet

The consensus price target fell 68% to US$6.00, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on IronNet, with the most bullish analyst valuing it at US$29.00 and the most bearish at US$10.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting IronNet's growth to accelerate, with the forecast 43% annualised growth to the end of 2023 ranking favourably alongside historical growth of 2.6% per annum over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that IronNet is expected to grow much faster than its industry.

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 IronNet. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of IronNet.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with IronNet's financials, such as a short cash runway. Learn more, and discover the 2 other risks we've identified, for 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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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.