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The latest analyst coverage could presage a bad day for Smith Micro Software, Inc. (NASDAQ:SMSI), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. 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 three analysts covering Smith Micro Software, is for revenues of US$40m in 2024, which would reflect an uncomfortable 9.2% reduction in Smith Micro Software's sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 49% to US$0.20. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$48m and losses of US$0.14 per share in 2024. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.
See our latest analysis for Smith Micro Software
The consensus price target fell 14% to US$3.17, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.
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. We would highlight that sales are expected to reverse, with a forecast 7.4% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 9.4% 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 12% annually for the foreseeable future. It's pretty clear that Smith Micro Software's revenues are expected to perform substantially worse than 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 Smith Micro Software. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Smith Micro Software.
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 Smith Micro Software going out to 2025, and you can see them free on our platform here.