The analysts covering Tigo Energy, Inc. (NASDAQ:TYGO) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the latest downgrade, the three analysts covering Tigo Energy provided consensus estimates of US$83m revenue in 2024, which would reflect a substantial 50% decline on its sales over the past 12 months. After this downgrade, the company is anticipated to report a loss of US$0.63 in 2024, a sharp decline from a profit over the last year. Yet before this consensus update, the analysts had been forecasting revenues of US$97m and losses of US$0.60 per share in 2024. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

See our latest analysis for Tigo Energy

The consensus price target fell 20% to US$4.70, implicitly signalling that lower earnings per share are a leading indicator for Tigo Energy's valuation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 43% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 54% 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 7.8% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Tigo Energy is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Tigo Energy's future valuation. 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 Tigo Energy after today.

That said, the analysts might have good reason to be negative on Tigo Energy, given concerns around earnings quality. For more information, you can click here to discover this and the 2 other risks we've identified.

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