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The analysts covering Energy Recovery, Inc. (NASDAQ:ERII) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
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Following the latest downgrade, Energy Recovery's three analysts currently expect revenues in 2025 to be US$141m, approximately in line with the last 12 months. Per-share earnings are expected to grow 14% to US$0.45. Previously, the analysts had been modelling revenues of US$159m and earnings per share (EPS) of US$0.61 in 2025. Indeed, we can see that the analysts are a lot more bearish about Energy Recovery's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
See our latest analysis for Energy Recovery
The consensus price target fell 13% to US$17.17, with the weaker earnings outlook clearly leading analyst valuation estimates.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Energy Recovery's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 0.3% growth on an annualised basis. This is compared to a historical growth rate of 6.0% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 3.7% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Energy Recovery.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. 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 Energy Recovery.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Energy Recovery analysts - going out to 2027, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.