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FTC Solar, Inc. (NASDAQ:FTCI) Analysts Are Cutting Their Estimates: Here's What You Need To Know

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As you might know, FTC Solar, Inc. (NASDAQ:FTCI) last week released its latest quarterly, and things did not turn out so great for shareholders. Unfortunately, FTC Solar delivered a serious earnings miss. Revenues of US$50m were 19% below expectations, and statutory losses ballooned 122% to US$0.28 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for FTC Solar

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

Taking into account the latest results, the consensus forecast from FTC Solar's seven analysts is for revenues of US$335.0m in 2022, which would reflect a sizeable 32% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 48% to US$0.66. Before this latest report, the consensus had been expecting revenues of US$417.6m and US$0.11 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

The average price target fell 24% to US$5.21, implicitly signalling that lower earnings per share are a leading indicator for FTC Solar's 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. Currently, the most bullish analyst values FTC Solar at US$8.00 per share, while the most bearish prices it at US$2.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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 clear from the latest estimates that FTC Solar's rate of growth is expected to accelerate meaningfully, with the forecast 44% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 15% over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect FTC Solar to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on FTC Solar. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple FTC Solar analysts - going out to 2024, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for FTC Solar 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.

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