This Broker Just Slashed Their Coda Octopus Group, Inc. (NASDAQ:CODA) Earnings Forecasts

The latest analyst coverage could presage a bad day for Coda Octopus Group, Inc. (NASDAQ:CODA), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business. What's more, Coda Octopus Group has been out of favour with the market in recent times, so it will be interesting to see if this downgrade is enough to sink the stock even further. Shares are down 6.9% to US$4.98 over the past 7 days.

Following the downgrade, the latest consensus from Coda Octopus Group's single analyst is for revenues of US$23m in 2022, which would reflect a credible 2.7% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to tumble 33% to US$0.31 in the same period. Before this latest update, the analyst had been forecasting revenues of US$26m and earnings per share (EPS) of US$0.49 in 2022. Indeed, we can see that the analyst is a lot more bearish about Coda Octopus Group's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Coda Octopus Group

It'll come as no surprise then, to learn that the analyst has cut their price target 11% to US$8.00.

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 clear from the latest estimates that Coda Octopus Group's rate of growth is expected to accelerate meaningfully, with the forecast 5.4% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 2.8% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 7.3% annually. So it's clear that despite the acceleration in growth, Coda Octopus Group is expected to grow meaningfully slower than the industry average.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Coda Octopus Group. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Coda Octopus Group's 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.