Bearish: Analysts Just Cut Their Inseego Corp. (NASDAQ:INSG) Revenue and EPS estimates

One thing we could say about the analysts on Inseego Corp. (NASDAQ:INSG) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the most recent consensus for Inseego from its four analysts is for revenues of US$272m in 2022 which, if met, would be a reasonable 2.0% increase on its sales over the past 12 months. Losses are supposed to balloon 48% to US$0.83 per share. However, before this estimates update, the consensus had been expecting revenues of US$303m and US$0.36 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.

Check out our latest analysis for Inseego

The consensus price target fell 26% to US$5.42, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Inseego at US$6.00 per share, while the most bearish prices it at US$5.00. This is a very narrow spread of estimates, implying either that Inseego is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Inseego's past performance and to peers in the same industry. We would highlight that Inseego's revenue growth is expected to slow, with the forecast 2.7% annualised growth rate until the end of 2022 being well below the historical 7.2% 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 6.7% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Inseego.

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 Inseego. 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.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Inseego, including dilutive stock issuance over the past year. For more information, you can click here to discover this and the 5 other flags 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.