The latest analyst coverage could presage a bad day for Cambium Networks Corporation (NASDAQ:CMBM), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the latest downgrade, the current consensus, from the seven analysts covering Cambium Networks, is for revenues of US$232m in 2023, which would reflect a substantial 23% reduction in Cambium Networks' 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$0.29 per share in 2023. Previously, the analysts had been modelling revenues of US$268m and earnings per share (EPS) of US$0.19 in 2023. So we can see that the consensus has become notably more bearish on Cambium Networks' outlook with these numbers, making a substantial drop in this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.
View our latest analysis for Cambium Networks
The consensus price target fell 35% to US$10.60, implicitly signalling that lower earnings per share are a leading indicator for Cambium Networks' valuation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 41% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 3.4% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.3% annually for the foreseeable future. It's pretty clear that Cambium Networks' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts are expecting Cambium Networks to become unprofitable this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Cambium Networks' 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 Cambium Networks.
That said, the analysts might have good reason to be negative on Cambium Networks, given dilutive stock issuance over the past year. Learn more, and discover the 1 other warning sign we've identified, for 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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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.
