The Downgrade: Here’s How Analysts View O2Micro International Ltd.’s (NASDAQ:OIIM) performance in the near-term

Analysts covering O2Micro International Limited (NASDAQ:OIIM) gave shareholders a dose of negativity today, by substantially revising their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing gray clouds on the horizon.

Following the latest downgrade, Twins analysts covering O2Micro International provided a consensus estimate of US$80m revenue in 2022, reflecting an uneasy 16% decline on its sales over the past 12 months. Following this downgrade, earnings are now expected to fall into loss-making territory, with analysts forecasting a loss of US$0.03 per share in 2022. Prior to this update, analysts had forecast revenue and earnings per share of US$96m. (EPS) US$0.24 in 2022. There seems to have been a major change in sentiment regarding O2Micro International’s prospects, with a measurable cut in revenue and analysts now projecting a loss instead of a profit.

See our latest analysis for O2Micro International

NasdaqGS: OIIM Earnings and Revenue Growth July 31st 2022

These estimates are interesting, but given how the forecasts compare, it may be useful to draw a few more broad strokes given O2Micro International’s past performance and to peers in the same industry. These estimates mean that sales are expected to slow, with annual revenue projected to decline 30% by the end of 2022. This represents a significant decrease from the annual growth of 13% over the past five years. In contrast, our data suggests that other companies in the same industry (with analyst coverage) forecast their revenues to grow by 8.4% annually for the foreseeable future. So although its revenue is projected to decline, this cloud doesn’t come with an expectation — O2Micro International is expected to lag behind the broader industry.

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The biggest drawback for us was that O2Micro International’s forecast this year went from profit to loss. Unfortunately analysts also lowered their revenue estimates, and industry data suggests O2Micro International’s revenue is expected to grow at a slower pace than the broader market. Following such a cut, investors could be forgiven for thinking analysts are too bearish on O2Micro International, and some readers may choose to stay away from the stock.

With that said, the long-term trajectory of the company’s earnings is much more important than what it was next year. We have analyst estimates for O2Micro International for 2023, and you can view them for free on our platform here.

Another way to discover interesting companies that may be reaching an inflection point is to track whether management is buying or selling, with our free list of growing companies that insiders are buying.

This article by Simple Wall St. is general in nature. We only provide commentary based on historical data and analyst forecasts using an unbiased methodology and our articles are not intended to be financial advice. It does not recommend buying or selling any stock, and does not take into account your objectives, or your financial situation. We aim to bring you long-term focused analytics powered by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative content. Simple Wall St does not have a position in any of the stocks mentioned.

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