One thing we could say about the analysts on SMART Global Holdings, Inc. (NASDAQ:SGH) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. 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 latest downgrade, the current consensus, from the five analysts covering SMART Global Holdings, is for revenues of US$1.2b in 2024, which would reflect an uneasy 17% reduction in SMART Global Holdings' sales over the past 12 months. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of US$0.45 per share in 2024. Previously, the analysts had been modelling revenues of US$1.7b and earnings per share (EPS) of US$1.03 in 2024. There looks to have been a major change in sentiment regarding SMART Global Holdings' prospects, with a pretty serious reduction to revenues and the analysts now forecasting a loss instead of a profit.

Check out our latest analysis for SMART Global Holdings

The consensus price target fell 21% to US$26.17, implicitly signalling that lower earnings per share are a leading indicator for SMART Global Holdings' 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. We would highlight that sales are expected to reverse, with a forecast 17% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 8.7% 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 15% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - SMART Global Holdings is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts are expecting SMART Global Holdings to become unprofitable this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that SMART Global Holdings' revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of SMART Global Holdings.

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 SMART Global Holdings' financials, such as recent substantial insider selling. Learn more, and discover the 5 other concerns we've identified, for 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.

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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.