Yahoo Finance Ballard Power Systems Inc. (TSE:BLDP) Analysts Just Slashed This Year's Estimates
Today is shaping up negative for Ballard Power Systems Inc. (TSE:BLDP) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.
After the downgrade, the consensus from Ballard Power Systems' 21 analysts is for revenues of US$99m in 2022, which would reflect a discernible 4.5% decline in sales compared to the last year of performance. Losses are forecast to hold steady at around US$0.58. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$111m and losses of US$0.53 per share in 2022. 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.
See our latest analysis for Ballard Power Systems
The consensus price target was broadly unchanged at US$7.81, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Ballard Power Systems at US$11.03 per share, while the most bearish prices it at US$8.91. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.
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. One more thing stood out to us about these estimates, and it's the idea that Ballard Power Systems' decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 8.8% to the end of 2022. This tops off a historical decline of 1.5% 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 36% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Ballard Power Systems to suffer worse 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 Ballard Power Systems. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Ballard Power Systems.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Ballard Power Systems 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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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.
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