Yahoo Finance The Charles & Colvard, Ltd. (NASDAQ:CTHR) Analyst Just Cut Their Revenue Forecast By 18%
Today is shaping up negative for Charles & Colvard, Ltd. (NASDAQ:CTHR) shareholders, with the covering analyst delivering a substantial negative revision to next year's forecasts. Revenue estimates were cut sharply as the analyst signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the consensus from single analyst covering Charles & Colvard is for revenues of US$39m in 2023, implying a not inconsiderable 11% decline in sales compared to the last 12 months. Before the latest update, the analyst was foreseeing US$48m of revenue in 2023. The consensus view seems to have become more pessimistic on Charles & Colvard, noting the measurable cut to revenue estimates in this update.
Check out our latest analysis for Charles & Colvard
The consensus price target fell 38% to US$2.00, with the analyst clearly less optimistic about Charles & Colvard's valuation following this update.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Charles & Colvard's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 8.6% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 11% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 9.5% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Charles & Colvard is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analyst cut their revenue estimates for next year. They're also anticipating slower revenue growth than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Charles & Colvard after today.
There might be good reason for analyst bearishness towards Charles & Colvard, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other concerns we've identified.
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.
