Analysts Just Slashed Their Ceres Power Holdings plc (LON:CWR) EPS Numbers

One thing we could say about the analysts on Ceres Power Holdings plc (LON:CWR) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the most recent consensus for Ceres Power Holdings from its eleven analysts is for revenues of UK£30m in 2022 which, if met, would be a huge 26% increase on its sales over the past 12 months. Per-share losses are expected to see a sharp uptick, reaching UK£0.24. Yet prior to the latest estimates, the analysts had been forecasting revenues of UK£36m and losses of UK£0.14 per share in 2022. 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.

View our latest analysis for Ceres Power Holdings

The consensus price target fell 7.5% to UK£11.61, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Ceres Power Holdings, with the most bullish analyst valuing it at UK£20.00 and the most bearish at UK£6.00 per share. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of 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 clear from the latest estimates that Ceres Power Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 60% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 35% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 25% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Ceres Power Holdings is expected to grow much faster than its industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Ceres Power Holdings. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Ceres Power Holdings.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Ceres Power Holdings analysts - going out to 2024, 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.

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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.

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