Market forces rained on the parade of Valens Semiconductor Ltd. (NYSE:VLN) shareholders today, when the analysts downgraded their forecasts for next year.   Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.    

Following the latest downgrade, the three analysts covering Valens Semiconductor provided consensus estimates of US$72m revenue in 2024, which would reflect a considerable 16% decline on its sales over the past 12 months.      Losses are predicted to fall substantially, shrinking 60% to US$0.12 per share.       Yet prior to the latest estimates, the analysts had been forecasting revenues of US$102m and losses of US$0.045 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.    

View our latest analysis for Valens Semiconductor

NYSE:VLN Earnings and Revenue Growth November 13th 2023

The consensus price target fell 20% to US$4.00, implicitly signalling that lower earnings per share are a leading indicator for Valens Semiconductor's valuation.    

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Valens Semiconductor's past performance and to peers in the same industry.     These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 13% by the end of 2024. This indicates a significant reduction from annual growth of 20% over the last three 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.  It's pretty clear that Valens Semiconductor's revenues are expected to perform substantially worse than 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.        With a serious cut to next year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Valens Semiconductor.  

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 Valens Semiconductor going out to 2025, and you can see them free on our platform here.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.