Westport Fuel Systems Inc. (TSE:WPRT) Analysts Are Cutting Their Estimates: Here's What You Need To Know

It's shaping up to be a tough period for Westport Fuel Systems Inc. (TSE:WPRT), which a week ago released some disappointing first-quarter results that could have a notable impact on how the market views the stock. It was a pretty negative result overall, with revenues of US$78m missing analyst predictions by 9.5%. Worse, the business reported a statutory loss of US$0.79 per share, much larger than the analysts had forecast prior to the result. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Westport Fuel Systems

After the latest results, the six analysts covering Westport Fuel Systems are now predicting revenues of US$334.4m in 2024. If met, this would reflect a satisfactory 2.2% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 27% to US$2.22. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$366.8m and losses of US$1.76 per share in 2024. So it's pretty clear the analysts have mixed opinions on Westport Fuel Systems after this update; revenues were downgraded and per-share losses expected to increase.

The average price target was broadly unchanged at CA$99.98, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.

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. It's pretty clear that there is an expectation that Westport Fuel Systems' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.0% growth on an annualised basis. This is compared to a historical growth rate of 3.8% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.3% per year. Factoring in the forecast slowdown in growth, it seems obvious that Westport Fuel Systems is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Westport Fuel Systems. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to 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 CA$99.98, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Westport Fuel Systems analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Westport Fuel Systems you should be aware of.

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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.