Analysts Have Lowered Expectations For Genasys Inc. (NASDAQ:GNSS) After Its Latest Results

Genasys Inc. (NASDAQ:GNSS) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. Statutory earnings fell substantially short of expectations, with revenues of US$4.4m missing forecasts by 45%. Losses exploded, with a per-share loss of US$0.15 some 54% below prior forecasts. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Genasys

After the latest results, the five analysts covering Genasys are now predicting revenues of US$50.5m in 2024. If met, this would reflect a major 25% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 47% to US$0.26. Before this latest report, the consensus had been expecting revenues of US$55.4m and US$0.16 per share in losses. While this year's revenue estimates dropped there was also a very substantial increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The analysts lifted their price target 12% to US$4.80, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value. 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. Currently, the most bullish analyst values Genasys at US$6.00 per share, while the most bearish prices it at US$3.50. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. The analysts are definitely expecting Genasys' growth to accelerate, with the forecast 34% annualised growth to the end of 2024 ranking favourably alongside historical growth of 10.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.7% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Genasys to grow faster than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Genasys. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Genasys. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Genasys analysts - going out to 2025, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Genasys that you need to be mindful of.

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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.