The analysts covering Rekor Systems, Inc. (NASDAQ:REKR) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After the downgrade, the dual analysts covering Rekor Systems are now predicting revenues of US$56m in 2024. If met, this would reflect a major 45% improvement in sales compared to the last 12 months. Losses are presumed to reduce, shrinking 13% per share from last year to US$0.53. However, before this estimates update, the consensus had been expecting revenues of US$66m and US$0.29 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

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. It's clear from the latest estimates that Rekor Systems' rate of growth is expected to accelerate meaningfully, with the forecast 64% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 33% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 13% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Rekor Systems to grow faster than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Rekor Systems. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Given the serious cut to this year's outlook, it's clear that analysts have turned more bearish on Rekor Systems, and we wouldn't blame shareholders for feeling a little more cautious themselves.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Rekor Systems, including a short cash runway. For more information, you can click here to discover this and the 3 other risks we've identified.

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 with high insider ownership.

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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.