Downgrade: Here's How Analysts See Intelligent Systems Corporation (NYSEMKT:INS) Performing In The Near Term

Market forces rained on the parade of Intelligent Systems Corporation (NYSEMKT:INS) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. At US$47.31, shares are up 7.5% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

After this downgrade, Intelligent Systems' two analysts are now forecasting revenues of US$44m in 2021. This would be a huge 22% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 42% to US$1.30. Prior to this update, the analysts had been forecasting revenues of US$53m and earnings per share (EPS) of US$2.06 in 2021. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

View our latest analysis for Intelligent Systems

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Intelligent Systems' past performance and to peers in the same industry. We would highlight that Intelligent Systems' revenue growth is expected to slow, with forecast 22% increase next year well below the historical 40% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 14% next year. Even after the forecast slowdown in growth, it seems obvious that Intelligent Systems is also expected to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Intelligent Systems. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on Intelligent Systems, and their negativity could be grounds for caution.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Intelligent Systems going out as far as 2023, and you can see them 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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