Today is shaping up negative for UFP Technologies, Inc. (NASDAQ:UFPT) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as the analyst signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
After the downgrade, the consensus from UFP Technologies' lone analyst is for revenues of US$186m in 2020, which would reflect a discernible 6.8% decline in sales compared to the last year of performance. Prior to the latest estimates, the analyst was forecasting revenues of US$211m in 2020. It looks like forecasts have become a fair bit less optimistic on UFP Technologies, given the substantial drop in revenue estimates.
Notably, the analyst has cut their price target 7.4% to US$50.00, suggesting concerns around UFP Technologies' valuation.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 6.8%, a significant reduction from annual growth of 8.9% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - UFP Technologies is expected to lag the wider industry.
The Bottom Line
The clear low-light was that the analyst slashing their revenue forecasts for UFP Technologies this year. They're also anticipating slower revenue growth than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on UFP Technologies after today.
Hungry for more information? One UFP Technologies broker/analyst has provided estimates out to 2021, which can be seen for 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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