Earnings Release: Here's Why Analysts Cut Their iPower Inc. (NASDAQ:IPW) Price Target To US$1.50
A week ago, iPower Inc. (NASDAQ:IPW) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Revenues and losses per share were both better than expected, with revenues of US$27m leading estimates by 9.1%. Statutory losses were smaller than the analystexpected, coming in at US$0.04 per share. Following the result, the analyst has updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analyst is expecting for next year.
Check out our latest analysis for iPower
After the latest results, the lone analyst covering iPower are now predicting revenues of US$105.5m in 2024. If met, this would reflect a solid 18% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 57% to US$0.13. Yet prior to the latest earnings, the analyst had been forecasting revenues of US$102.3m and losses of US$0.09 per share in 2024. So it's pretty clear the analyst has mixed opinions on iPower even after this update; although they upped their revenue numbers, it came at the cost of a sizeable expansion in per-share losses.
It will come as no surprise that expanding losses caused the consensus price target to fall 50% to US$1.50with the analyst implicitly ranking ongoing losses as a greater concern than growing revenues.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of iPower'shistorical trends, as the 25% annualised revenue growth to the end of 2024 is roughly in line with the 24% annual growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 4.7% per year. So it's pretty clear that iPower is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to take away is that the analyst increased their loss per share estimates for next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analyst seemingly not reassured by the latest results, leading to a lower estimate of iPower's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on iPower. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for iPower (of which 1 can't be ignored!) you should know about.
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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.
