Analysts Just Slashed Their Lumentum Holdings Inc. (NASDAQ:LITE) Earnings Forecasts

Today is shaping up negative for Lumentum Holdings Inc. (NASDAQ:LITE) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the latest downgrade, the 15 analysts covering Lumentum Holdings provided consensus estimates of US$1.6b revenue in 2024, which would reflect an uneasy 9.5% decline on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 87% to US$0.07. Prior to this update, the analysts had been forecasting revenues of US$1.9b and earnings per share (EPS) of US$0.87 in 2024. There looks to have been a major change in sentiment regarding Lumentum Holdings' prospects, with a measurable cut to revenues and the analysts now forecasting a loss instead of a profit.

Check out our latest analysis for Lumentum Holdings

The consensus price target fell 9.4% to US$53.66, implicitly signalling that lower earnings per share are a leading indicator for Lumentum Holdings' valuation. 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. The most optimistic Lumentum Holdings analyst has a price target of US$65.50 per share, while the most pessimistic values it at US$40.00. 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.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 7.6% by the end of 2024. This indicates a significant reduction from annual growth of 6.4% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Lumentum Holdings is expected to lag the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Lumentum Holdings dropped from profits to a loss next year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Lumentum Holdings' revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Lumentum Holdings.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Lumentum Holdings going out to 2025, 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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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.