Shorn Like A Sheep: Analysts Just Shaved Their Kornit Digital Ltd. (NASDAQ:KRNT) Forecasts Dramatically
One thing we could say about the analysts on Kornit Digital Ltd. (NASDAQ:KRNT) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. 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 four analysts covering Kornit Digital provided consensus estimates of US$151m revenue in 2020, which would reflect a not inconsiderable 16% decline on its sales over the past 12 months. After this downgrade, the company is anticipated to report a loss of US$0.11 in 2020, a sharp decline from a profit over the last year. Previously, the analysts had been modelling revenues of US$224m and earnings per share (EPS) of US$0.49 in 2020. There looks to have been a major change in sentiment regarding Kornit Digital's prospects, with a pretty serious reduction to revenues and the analysts now forecasting a loss instead of a profit.
See our latest analysis for Kornit Digital
The consensus price target fell 9.4% to US$37.60, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Kornit Digital analyst has a price target of US$48.00 per share, while the most pessimistic values it at US$31.00. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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. We would highlight that sales are expected to reverse, with the forecast 16% revenue decline a notable change from historical growth of 17% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 1.1% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Kornit Digital is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that analysts are expecting Kornit Digital to become unprofitable this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales 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.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Kornit Digital going out to 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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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