Today is shaping up negative for Genasys Inc. (NASDAQ:GNSS) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Bidders are definitely seeing a different story, with the stock price of US$1.95 reflecting a 11% rise in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.
Following the latest downgrade, the current consensus, from the three analysts covering Genasys, is for revenues of US$30m in 2024, which would reflect an uneasy 16% reduction in Genasys' sales over the past 12 months. Before the latest update, the analysts were foreseeing US$35m of revenue in 2024. It looks like forecasts have become a fair bit less optimistic on Genasys, given the substantial drop in revenue estimates.
We'd point out that there was no major changes to their price target of US$4.08, suggesting the latest estimates were not enough to shift their view on the value of the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 29% by the end of 2024. This indicates a significant reduction from annual growth of 7.0% 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 5.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Genasys is expected to lag the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Genasys this year. They're also anticipating slower revenue growth than the wider market. 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 Genasys after today.
Looking for more information? At least one of Genasys' three analysts has provided estimates out to 2026, which can be seen for 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 backed by insiders.
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