Today is shaping up negative for Cepton, Inc. (NASDAQ:CPTN) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Bidders are definitely seeing a different story, with the stock price of US$3.22 reflecting a 18% rise 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 downgrade, the most recent consensus for Cepton from its four analysts is for revenues of US$19m in 2024 which, if met, would be a huge 45% increase on its sales over the past 12 months. Losses are presumed to reduce, shrinking 18% per share from last year to US$2.50. However, before this estimates update, the consensus had been expecting revenues of US$34m and US$2.29 per share in losses. 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.

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. We can infer from the latest estimates that forecasts expect a continuation of Cepton'shistorical trends, as the 45% annualised revenue growth to the end of 2024 is roughly in line with the 51% annual revenue growth over the past three years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 5.4% annually. So although Cepton is expected to maintain its revenue growth rate, it's definitely expected to grow faster 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 Cepton. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Cepton after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Cepton analysts - going out to 2026, 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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