UK Markets close in 41 mins
  • FTSE 100

    7,137.31
    -175.01 (-2.39%)
     
  • FTSE 250

    18,505.63
    -533.16 (-2.80%)
     
  • AIM

    872.82
    -20.50 (-2.29%)
     
  • GBP/EUR

    1.1635
    +0.0029 (+0.25%)
     
  • GBP/USD

    1.2136
    +0.0014 (+0.1129%)
     
  • BTC-GBP

    15,672.25
    -987.77 (-5.93%)
     
  • CMC Crypto 200

    407.01
    -24.46 (-5.67%)
     
  • S&P 500

    3,752.46
    -66.37 (-1.74%)
     
  • DOW

    30,558.05
    -471.26 (-1.52%)
     
  • CRUDE OIL

    105.44
    -4.34 (-3.95%)
     
  • GOLD FUTURES

    1,811.20
    -6.30 (-0.35%)
     
  • NIKKEI 225

    26,393.04
    -411.56 (-1.54%)
     
  • HANG SENG

    21,859.79
    -137.10 (-0.62%)
     
  • DAX

    12,698.65
    -304.70 (-2.34%)
     
  • CAC 40

    5,894.86
    -136.62 (-2.27%)
     

Quantum Corporation (NASDAQ:QMCO) Analysts Are Reducing Their Forecasts For Next Year

  • Oops!
    Something went wrong.
    Please try again later.
·3-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Market forces rained on the parade of Quantum Corporation (NASDAQ:QMCO) shareholders today, when the analysts downgraded their forecasts for next year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the four analysts covering Quantum are now predicting revenues of US$386m in 2023. If met, this would reflect an okay 4.4% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 52% to US$0.33. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$429m and losses of US$0.097 per share in 2023. 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.

View our latest analysis for Quantum

earnings-and-revenue-growth
earnings-and-revenue-growth

The consensus price target fell 42% to US$6.67, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. There are some variant perceptions on Quantum, with the most bullish analyst valuing it at US$10.00 and the most bearish at US$4.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. For example, we noticed that Quantum's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 3.5% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 7.0% 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 5.5% annually for the foreseeable future. So although Quantum's revenue growth is expected to improve, it is still expected to grow slower than the 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. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Quantum, including dilutive stock issuance over the past year. Learn more, and discover the 4 other warning signs we've identified, for 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting