Market forces rained on the parade of Gogoro Inc. (NASDAQ:GGR) shareholders today, when the analysts downgraded their forecasts for this year.   There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.      Surprisingly the share price has been buoyant, rising 12% to US$2.66 in the past 7 days.   Whether the downgrade will have a negative impact on demand for shares is yet to be seen.  

After the downgrade, the consensus from Gogoro's three analysts is for revenues of US$345m in 2023, which would reflect a discernible 2.5% decline in sales compared to the last year of performance.      Per-share losses are expected to explode, reaching US$0.32 per share.       Yet before this consensus update, the analysts had been forecasting revenues of US$389m and losses of US$0.31 per share in 2023.         So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.    

View our latest analysis for Gogoro

NasdaqGS:GGR Earnings and Revenue Growth December 15th 2023

The consensus price target fell 16% to US$3.77, implicitly signalling that lower earnings per share are a leading indicator for Gogoro's 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.     These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 2.5% by the end of 2023. This indicates a significant reduction from annual growth of 2.6% over the last three years.    Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 17% per year.  So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Gogoro is expected to lag the wider industry.    

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Gogoro.        Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Gogoro's revenues are expected to grow slower than the wider market.        The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Gogoro's future valuation.    Given the stark change in sentiment, we'd understand if investors became more cautious on Gogoro after today.  

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders.   At Simply Wall St, we have a full range of analyst estimates for Gogoro going out to 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.