Today is shaping up negative for CommScope Holding Company, Inc. (NASDAQ:COMM) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. Investors however, have been notably more optimistic about CommScope Holding Company recently, with the stock price up an astounding 30% to US$1.90 in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.
Following the latest downgrade, the seven analysts covering CommScope Holding Company provided consensus estimates of US$6.5b revenue in 2024, which would reflect a not inconsiderable 17% decline on its sales over the past 12 months. Before the latest update, the analysts were foreseeing US$7.4b of revenue in 2024. It looks like forecasts have become a fair bit less optimistic on CommScope Holding Company, given the substantial drop in revenue estimates.
See our latest analysis for CommScope Holding Company
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 sales are expected to reverse, with a forecast 14% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 9.2% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.7% annually for the foreseeable future. It's pretty clear that CommScope Holding Company's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for CommScope Holding Company next year. They're also anticipating slower revenue growth than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on CommScope Holding Company after today.
Looking for more information? At least one of CommScope Holding Company's seven analysts has provided estimates out to 2025, which can be seen for 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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