Today is shaping up negative for SunOpta Inc. (NASDAQ:STKL) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Surprisingly the share price has been buoyant, rising 12% to US$4.41 in the past 7 days. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the downgrade, the consensus from seven analysts covering SunOpta is for revenues of US$684m in 2024, implying a substantial 28% decline in sales compared to the last 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$0.07 in per-share earnings. Previously, the analysts had been modelling revenues of US$990m and earnings per share (EPS) of US$0.07 in 2024. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a sizeable cut to revenues and reconfirming their earnings per share estimates.

See our latest analysis for SunOpta

The consensus has reconfirmed its price target of US$9.20, showing that the analysts don't expect weaker sales expectationsnext year to have a material impact on SunOpta's market value.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the SunOpta's past performance and to peers in the same industry. One more thing stood out to us about these estimates, and it's the idea that SunOpta's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 23% to the end of 2024. This tops off a historical decline of 3.0% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 2.4% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect SunOpta to suffer worse than the wider industry.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. 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 SunOpta after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple SunOpta analysts - going out to 2024, and you can see them free on our platform here.

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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