One thing we could say about the analysts on Diodes Incorporated (NASDAQ:DIOD) - 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.

After the downgrade, the consensus from Diodes' six analysts is for revenues of US$1.5b in 2024, which would reflect a definite 19% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to nosedive 45% to US$3.53 in the same period. Before this latest update, the analysts had been forecasting revenues of US$1.8b and earnings per share (EPS) of US$4.68 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

Check out our latest analysis for Diodes

It'll come as no surprise then, to learn that the analysts have cut their price target 24% to US$67.00.

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. We would highlight that sales are expected to reverse, with a forecast 16% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 13% 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 16% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Diodes is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. 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 Diodes' future valuation. 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 Diodes after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Diodes' financials, such as recent substantial insider selling. For more information, you can click here to discover this and the 1 other risk we've identified.

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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