Some Analysts Just Cut Their Tidewater Renewables Ltd. (TSE:LCFS) Estimates
Market forces rained on the parade of Tidewater Renewables Ltd. (TSE:LCFS) 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. The stock price has risen 4.9% to CA$8.73 over the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.
Following the downgrade, the latest consensus from Tidewater Renewables' six analysts is for revenues of CA$145m in 2023, which would reflect a substantial 101% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 45% to CA$0.23. Before this latest update, the analysts had been forecasting revenues of CA$199m and earnings per share (EPS) of CA$0.0017 in 2023. So we can see that the consensus has become notably more bearish on Tidewater Renewables' outlook with these numbers, making a sizeable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.
See our latest analysis for Tidewater Renewables
The consensus price target was broadly unchanged at CA$15.19, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.
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. It's clear from the latest estimates that Tidewater Renewables' rate of growth is expected to accelerate meaningfully, with the forecast 3x annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 6.0% over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Tidewater Renewables to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts are expecting Tidewater Renewables to become unprofitable this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. 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 Tidewater Renewables after today.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Tidewater Renewables analysts - going out to 2025, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.
