One thing we could say about the analysts on Arteris, Inc. (NASDAQ:AIP) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the most recent consensus for Arteris from its six analysts is for revenues of US$56m in 2024 which, if met, would be a credible 7.9% increase on its sales over the past 12 months. Per-share losses are expected to creep up to US$1.00. However, before this estimates update, the consensus had been expecting revenues of US$69m and US$0.74 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Arteris

The consensus price target fell 17% to US$11.50, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.

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. We would highlight that Arteris' revenue growth is expected to slow, with the forecast 6.2% annualised growth rate until the end of 2024 being well below the historical 10% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. Factoring in the forecast slowdown in growth, it seems obvious that Arteris is also expected to grow slower than other industry participants.

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 Arteris. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Arteris' revenues are expected to grow slower than the wider market. With a serious cut to next year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Arteris.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Arteris, including dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other flags we've identified.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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