The latest analyst coverage could presage a bad day for Genasys Inc. (NASDAQ:GNSS), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After this downgrade, Genasys' three analysts are now forecasting revenues of US$56m in 2025. This would be a sizeable 132% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 60% to US$0.28 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$63m and losses of US$0.12 per share in 2025. 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.

There was no major change to the consensus price target of US$5.33, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Genasys' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 132% growth to the end of 2025 on an annualised basis. That is well above its historical decline of 0.3% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 8.6% per year. Not only are Genasys' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Genasys after the downgrade.

There might be good reason for analyst bearishness towards Genasys, like a short cash runway. For more information, you can click here to discover this and the 1 other risk we've identified.

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