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Market forces rained on the parade of Clearfield, Inc. (NASDAQ:CLFD) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.
Following the latest downgrade, the current consensus, from the five analysts covering Clearfield, is for revenues of US$152m in 2024, which would reflect a disturbing 43% reduction in Clearfield's sales over the past 12 months. After this downgrade, the company is anticipated to report a loss of US$0.54 in 2024, a sharp decline from a profit over the last year. Prior to this update, the analysts had been forecasting revenues of US$229m and earnings per share (EPS) of US$1.17 in 2024. There looks to have been a major change in sentiment regarding Clearfield's prospects, with a pretty serious reduction to revenues and the analysts now forecasting a loss instead of a profit.
View our latest analysis for Clearfield
The consensus price target fell 22% to US$35.00, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 43% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 33% 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 4.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Clearfield is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that analysts are expecting Clearfield 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. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Clearfield.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Clearfield, including dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other concerns we've identified.