One thing we could say about the analysts on CommScope Holding Company, Inc. (NASDAQ:COMM) – they aren’t optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook – perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the consensus from seven analysts covering CommScope Holding Company is for revenues of US$6.5b in 2024, implying a definite 17% decline in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 85% to US$1.47. Yet before this consensus update, the analysts had been forecasting revenues of US$7.4b and losses of US$0.04 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 CommScope Holding Company
The consensus price target fell 32% to US$2.79, implicitly signalling that lower earnings per share are a leading indicator for CommScope Holding Company’s valuation.
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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 14% by the end of 2024. This indicates a significant reduction from annual growth of 9.2% 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 4.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – CommScope Holding Company is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of CommScope Holding Company’s future valuation. Given the stark change in sentiment, we’d understand if investors became more cautious on CommScope Holding Company after today.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. At Simply Wall St, we have a full range of analyst estimates for CommScope Holding Company going out to 2025, 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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Find out whether CommScope Holding Company is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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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.
