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One thing we could say about the analysts on Genasys Inc. (NASDAQ:GNSS) - 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 downgrade, the latest consensus from Genasys' three analysts is for revenues of US$56m in 2025, which would reflect a substantial 132% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 60% to US$0.28 per share. However, before this estimates update, the consensus had been expecting revenues of US$63m and US$0.12 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
Check out our latest analysis for Genasys
The consensus price target was broadly unchanged at US$5.33, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.
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. One thing stands out from these estimates, which is that Genasys is forecast to grow faster in the future than it has in the past, with revenues expected to display 132% annualised growth until the end of 2025. If achieved, this would be a much better result than the 0.3% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 8.6% annually. Not only are Genasys' 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 take away is that analysts increased their loss per share estimates for this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Genasys.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Genasys' business, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 1 other concern we've identified.