FTC Solar, Inc. (NASDAQ:FTCI) Analysts Are Cutting Their Estimates: Here's What You Need To Know
It's been a sad week for FTC Solar, Inc. (NASDAQ:FTCI), who've watched their investment drop 13% to US$0.44 in the week since the company reported its full-year result. The results look positive overall; while revenues of US$127m were in line with analyst predictions, statutory losses were 2.4% smaller than expected, with FTC Solar losing US$0.44 per share. Following the result, the analysts have 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Check out our latest analysis for FTC Solar
Taking into account the latest results, the most recent consensus for FTC Solar from seven analysts is for revenues of US$146.9m in 2024. If met, it would imply a meaningful 16% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 41% to US$0.26. Before this latest report, the consensus had been expecting revenues of US$231.5m and US$0.21 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.
The average price target fell 30% to US$0.91, implicitly signalling that lower earnings per share are a leading indicator for FTC Solar's valuation. 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. There are some variant perceptions on FTC Solar, with the most bullish analyst valuing it at US$2.00 and the most bearish at US$0.20 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that FTC Solar's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 16% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 22% a year over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 8.2% per year. Not only are FTC Solar's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at FTC Solar. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for FTC Solar going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with FTC Solar , and understanding them should be part of your investment process.
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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.
