Bearish: Analysts Just Cut Their EMCORE Corporation (NASDAQ:EMKR) Revenue and EPS estimates

The latest analyst coverage could presage a bad day for EMCORE Corporation (NASDAQ:EMKR), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the three analysts covering EMCORE, is for revenues of US$84m in 2024, which would reflect a definite 14% reduction in EMCORE's sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 68% to US$1.84. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$102m and losses of US$1.65 per share in 2024. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for EMCORE

The consensus price target fell 83% to US$2.00, implicitly signalling that lower earnings per share are a leading indicator for EMCORE's valuation.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One more thing stood out to us about these estimates, and it's the idea that EMCORE's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 26% to the end of 2024. This tops off a historical decline of 5.9% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 5.2% annually. So while a broad number of companies are forecast to grow, unfortunately EMCORE is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at EMCORE. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales 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.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with EMCORE's business, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 4 other warning signs we've identified.

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.