The latest analyst coverage could presage a bad day for MP Materials Corp. (NYSE:MP), 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 the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the consensus from MP Materials' seven analysts is for revenues of US$224m in 2024, which would reflect an uneasy 12% decline in sales compared to the last year of performance. Per-share earnings are expected to jump 136% to US$0.32. Before this latest update, the analysts had been forecasting revenues of US$395m and earnings per share (EPS) of US$0.42 in 2024. Indeed, we can see that the analysts are a lot more bearish about MP Materials' prospects, administering a sizeable cut to revenue estimates and slashing their EPS estimates to boot.

It'll come as no surprise then, to learn that the analysts have cut their price target 5.5% to US$26.73.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 12% 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 4.0% per year. It's pretty clear that MP Materials' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for MP Materials. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that MP Materials' revenues are expected to grow 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 MP Materials.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with MP Materials' business, like its declining profit margins. Learn more, and discover the 1 other warning sign we've identified, for free on our platform here.

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