The analysts covering EMCORE Corporation (NASDAQ:EMKR) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the three analysts covering EMCORE, is for revenues of US$84m in 2024, which would reflect a chunky 14% reduction in EMCORE's sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 68% to US$1.84. Yet before this consensus update, the analysts had been forecasting revenues of US$102m and losses of US$1.65 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

The consensus price target fell 83% to US$2.00, implicitly signalling that lower earnings per share are a leading indicator for EMCORE's valuation.

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. Over the past five years, revenues have declined around 5.9% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 26% decline in revenue until the end of 2024. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 5.2% per year. So while a broad number of companies are forecast to grow, unfortunately EMCORE is expected to see its sales affected worse than other companies in the 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 EMCORE. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that EMCORE's revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

That said, the analysts might have good reason to be negative on EMCORE, given dilutive stock issuance over the past year. For more information, you can click here to discover this and the 4 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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