Yahoo Finance What Does The Future Hold For Ballard Power Systems Inc. (TSE:BLDP)? These Analysts Have Been Cutting Their Estimates
One thing we could say about the analysts on Ballard Power Systems Inc. (TSE:BLDP) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. Surprisingly the share price has been buoyant, rising 19% to CA$8.54 in the past 7 days. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.
After the downgrade, the 23 analysts covering Ballard Power Systems are now predicting revenues of US$120m in 2023. If met, this would reflect a major 20% improvement in sales compared to the last 12 months. Losses are presumed to reduce, shrinking 15% from last year to US$0.52. However, before this estimates update, the consensus had been expecting revenues of US$134m and US$0.50 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
See our latest analysis for Ballard Power Systems
The consensus price target fell 12% to US$6.42, implicitly signalling that lower earnings per share are a leading indicator for Ballard Power Systems' valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Ballard Power Systems analyst has a price target of US$11.60 per share, while the most pessimistic values it at US$5.99. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Ballard Power Systems' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 16% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 2.0% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 37% annually for the foreseeable future. So although Ballard Power Systems' revenue growth is expected to improve, it is still expected to grow slower than the industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Ballard Power Systems. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Ballard Power Systems' revenues are expected to grow slower than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Ballard Power Systems after today.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Ballard Power Systems analysts - going out to 2024, and you can see them free on our platform here.
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 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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