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Tuya Inc. (NYSE:TUYA) Analysts Are Cutting Their Estimates: Here's What You Need To Know

·3-min read

Shareholders in Tuya Inc. (NYSE:TUYA) had a terrible week, as shares crashed 28% to US$2.18 in the week since its latest first-quarter results. Revenues were in line with expectations, at US$55m, while statutory losses ballooned to US$0.15 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Tuya

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

Following the latest results, Tuya's six analysts are now forecasting revenues of US$309.6m in 2022. This would be a reasonable 3.0% improvement in sales compared to the last 12 months. Losses are expected to increase slightly, to US$0.36 per share. Before this latest report, the consensus had been expecting revenues of US$328.9m and US$0.33 per share in losses. While this year's revenue estimates dropped there was also a considerable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The average price target was broadly unchanged at US$4.84, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Tuya, with the most bullish analyst valuing it at US$9.50 and the most bearish at US$3.00 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Tuya's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 4.0% growth on an annualised basis. This is compared to a historical growth rate of 38% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 14% per year. Factoring in the forecast slowdown in growth, it seems obvious that Tuya is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$4.84, with the latest estimates not enough to have an impact on their price targets.

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 Tuya analysts - going out to 2024, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Tuya that you should be aware of.

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.