The latest analyst coverage could presage a bad day for Coda Octopus Group, Inc. (NASDAQ:CODA), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the lone analyst covering Coda Octopus Group is now predicting revenues of US$23m in 2022. If met, this would reflect a modest 4.5% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to reduce 2.1% to US$0.31 in the same period. Before this latest update, the analyst had been forecasting revenues of US$26m and earnings per share (EPS) of US$0.49 in 2022. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for Coda Octopus Group

It'll come as no surprise then, to learn that the analyst has cut their price target 11% to US$8.00.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analyst is definitely expecting Coda Octopus Group's growth to accelerate, with the forecast 9.2% annualised growth to the end of 2022 ranking favourably alongside historical growth of 3.4% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 8.5% per year. Coda Octopus Group is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Coda Octopus Group. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of Coda Octopus Group.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Coda Octopus Group going out as far as 2023, and you can see them free on our platform here.

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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