Yahoo Finance Analysts Just Shaved Their Universal Electronics Inc. (NASDAQ:UEIC) Forecasts Dramatically
One thing we could say about the analysts on Universal Electronics Inc. (NASDAQ:UEIC) - 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) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
Following the latest downgrade, the current consensus, from the four analysts covering Universal Electronics, is for revenues of US$443m in 2023, which would reflect an uncomfortable 18% reduction in Universal Electronics' sales over the past 12 months. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of US$1.32 per share in 2023. Before this latest update, the analysts had been forecasting revenues of US$540m and earnings per share (EPS) of US$1.75 in 2023. There looks to have been a major change in sentiment regarding Universal Electronics' prospects, with a substantial drop in revenues and the analysts now forecasting a loss instead of a profit.
View our latest analysis for Universal Electronics
The consensus price target fell 40% to US$22.50, implicitly signalling that lower earnings per share are a leading indicator for Universal Electronics' valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Universal Electronics analyst has a price target of US$28.00 per share, while the most pessimistic values it at US$20.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. Over the past five years, revenues have declined around 5.2% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 18% decline in revenue until the end of 2023. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue shrink 1.2% per year. So it's pretty clear that Universal Electronics sales are expected to decline at a faster rate than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Universal Electronics dropped from profits to a loss this year. Unfortunately they also cut their revenue estimates for this year, and they expect sales to lag the wider market. That said, earnings per share are more important for creating value for shareholders. 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 Universal Electronics.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Universal Electronics analysts - going out to 2024, 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 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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