Some Analysts Just Cut Their Kornit Digital Ltd. (NASDAQ:KRNT) Estimates
Today is shaping up negative for Kornit Digital Ltd. (NASDAQ:KRNT) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the downgrade, the consensus from eight analysts covering Kornit Digital is for revenues of US$277m in 2022, implying an uncomfortable 18% decline in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$381m of revenue in 2022. The consensus view seems to have become more pessimistic on Kornit Digital, noting the sizeable cut to revenue estimates in this update.
Check out our latest analysis for Kornit Digital
The consensus price target fell 39% to US$49.50, with the analysts clearly less optimistic about Kornit Digital's valuation following this update. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Kornit Digital at US$95.00 per share, while the most bearish prices it at US$26.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Kornit Digital's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 24% by the end of 2022. This indicates a significant reduction from annual growth of 23% 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 6.6% annually for the foreseeable future. It's pretty clear that Kornit Digital's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. 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 Kornit Digital after today.
Looking to learn more? At least one of Kornit Digital's eight analysts has provided estimates out to 2024, 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.
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