The analysts covering GrafTech International Ltd. (NYSE:EAF) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. 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 consensus from five analysts covering GrafTech International is for revenues of US$572m in 2024, implying a small 7.7% decline in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 63% to US$0.36. Yet before this consensus update, the analysts had been forecasting revenues of US$681m and losses of US$0.20 per share in 2024. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
The consensus price target fell 22% to US$1.75, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2024 compared to the historical decline of 16% per annum over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 7.9% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect GrafTech International to suffer worse than 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 GrafTech International. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that GrafTech International's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of GrafTech International.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for GrafTech International going out to 2026, and you can see them free on our platform here.
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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.