Today is shaping up negative for Clearfield, Inc. (NASDAQ:CLFD) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the consensus from five analysts covering Clearfield is for revenues of US$152m in 2024, implying a sizeable 43% decline in sales compared to the last 12 months. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of US$0.54 per share in 2024. Before this latest update, the analysts had been forecasting revenues of US$229m and earnings per share (EPS) of US$1.17 in 2024. So we can see that the consensus has become notably more bearish on Clearfield's outlook with these numbers, making a sizeable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

View our latest analysis for Clearfield

The consensus price target fell 22% to US$35.00, implicitly signalling that lower earnings per share are a leading indicator for Clearfield's valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 43% by the end of 2024. This indicates a significant reduction from annual growth of 33% 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 4.4% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Clearfield is expected to lag the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Clearfield dropped from profits to a loss this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Clearfield.

There might be good reason for analyst bearishness towards Clearfield, like its declining profit margins. For more information, you can click here to discover this and the 2 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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