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This Broker Just Slashed Their RF Industries, Ltd. (NASDAQ:RFIL) Earnings Forecasts

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Simply Wall St
·3 min read
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The latest analyst coverage could presage a bad day for RF Industries, Ltd. (NASDAQ:RFIL), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

Following the downgrade, the current consensus from RF Industries' one analyst is for revenues of US$53m in 2021 which - if met - would reflect a meaningful 12% increase on its sales over the past 12 months. Statutory earnings per share are presumed to shoot up 325% to US$0.24. Before this latest update, the analyst had been forecasting revenues of US$64m and earnings per share (EPS) of US$0.33 in 2021. Indeed, we can see that the analyst is a lot more bearish about RF Industries' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for RF Industries

earnings-and-revenue-growth
earnings-and-revenue-growth

It'll come as no surprise then, to learn that the analyst has cut their price target 19% to US$6.25.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that RF Industries' revenue growth is expected to slow, with forecast 12% increase next year well below the historical 16% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.3% next year. So it's pretty clear that, while RF Industries' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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 RF Industries. While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. With a serious cut to next year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of RF Industries.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for RF Industries going out as far as 2021, 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 that insiders are buying.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.