Time To Worry? Analysts Just Downgraded Their PAR Technology Corporation (NYSE:PAR) Outlook

Market forces rained on the parade of PAR Technology Corporation (NYSE:PAR) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Bidders are definitely seeing a different story, with the stock price of US$50.79 reflecting a 13% rise in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

After the downgrade, the consensus from PAR Technology's nine analysts is for revenues of US$355m in 2024, which would reflect a chunky 17% decline in sales compared to the last year of performance. Losses are presumed to reduce, shrinking 19% per share from last year to US$1.63. Yet before this consensus update, the analysts had been forecasting revenues of US$406m and losses of US$1.79 per share in 2024. We can see there's definitely been a change in sentiment in this update, with the analysts administering a meaningful downgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

Check out our latest analysis for PAR Technology

There was a decent 8.2% increase in the price target to US$62.38, with the analysts clearly signalling that the expected reduction in losses is a positive, despite a weaker revenue outlook.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 31% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 18% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.4% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - PAR Technology is expected to lag the wider industry.

The Bottom Line

Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on PAR Technology after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for PAR Technology going out to 2026, 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 backed by insiders.

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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.