One thing we could say about the covering analyst on Ubiquiti Inc. (NYSE:UI) - 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 analyst has soured majorly on the business.
Following this downgrade, Ubiquiti's sole analyst are forecasting 2023 revenues to be US$1.8b, approximately in line with the last 12 months. Statutory earnings per share are expected to be US$7.40, roughly flat on the last 12 months. Before this latest update, the analyst had been forecasting revenues of US$2.2b and earnings per share (EPS) of US$11.52 in 2023. Indeed, we can see that the analyst is a lot more bearish about Ubiquiti's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
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. It's pretty clear that there is an expectation that Ubiquiti's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 1.1% growth on an annualised basis. This is compared to a historical growth rate of 17% over the past 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 Ubiquiti.
The Bottom Line
The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Ubiquiti. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Ubiquiti's revenues are expected to grow slower than the wider market. Given the serious cut to next year's outlook, it's clear that the analyst has turned more bearish on Ubiquiti, and we wouldn't blame shareholders for feeling a little more cautious themselves.
There might be good reason for analyst bearishness towards Ubiquiti, like a weak balance sheet. Learn more, and discover the 2 other flags we've identified, for free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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.