This Analyst Just Downgraded Their Coda Octopus Group, Inc. (NASDAQ:CODA) EPS Forecasts
Today is shaping up negative for Coda Octopus Group, Inc. (NASDAQ:CODA) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon. Recent action in the market also suggests Coda Octopus Group has lost favour recently, which could make today's downgrade an even greater concern in the near term. The stock has already fallen 6.9% to US$4.98 in the last week.
After the downgrade, the one analyst covering Coda Octopus Group is now predicting revenues of US$23m in 2022. If met, this would reflect a credible 2.7% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to tumble 33% to US$0.31 in the same period. Prior to this update, the analyst had been forecasting revenues of US$26m and earnings per share (EPS) of US$0.49 in 2022. Indeed, we can see that the analyst is a lot more bearish about Coda Octopus Group's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
View our latest analysis for Coda Octopus Group
It'll come as no surprise then, to learn that the analyst has cut their price target 11% to US$8.00.
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. The analyst is definitely expecting Coda Octopus Group's growth to accelerate, with the forecast 5.4% annualised growth to the end of 2022 ranking favourably alongside historical growth of 2.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 7.3% annually. So it's clear that despite the acceleration in growth, Coda Octopus Group is expected to grow meaningfully slower than the industry average.
The Bottom Line
The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Coda Octopus Group.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2023, which can be seen for 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.
