Need To Know: Analysts Just Made A Substantial Cut To Their Valens Semiconductor Ltd. (NYSE:VLN) Estimates
The analysts covering Valens Semiconductor Ltd. (NYSE:VLN) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the latest downgrade, the current consensus, from the three analysts covering Valens Semiconductor, is for revenues of US$72m in 2024, which would reflect an uneasy 16% reduction in Valens Semiconductor's sales over the past 12 months. Losses are predicted to fall substantially, shrinking 60% to US$0.12 per share. However, before this estimates update, the consensus had been expecting revenues of US$102m and US$0.045 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
See our latest analysis for Valens Semiconductor
The consensus price target fell 20% to US$4.00, implicitly signalling that lower earnings per share are a leading indicator for Valens Semiconductor's 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. We would highlight that sales are expected to reverse, with a forecast 13% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 20% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 16% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Valens Semiconductor is expected to lag the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Valens Semiconductor. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Valens Semiconductor's revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Valens Semiconductor going out to 2025, 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.
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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.
