Today is shaping up negative for Matrix Composites & Engineering Ltd (ASX:MCE) 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.

Following the latest downgrade, the twin analysts covering Matrix Composites & Engineering provided consensus estimates of AU$80m revenue in 2025, which would reflect a chunky 19% decline on its sales over the past 12 months. Statutory earnings per share are anticipated to plummet 89% to AU$0.004 in the same period. Previously, the analysts had been modelling revenues of AU$90m and earnings per share (EPS) of AU$0.02 in 2025. Indeed, we can see that the analysts are a lot more bearish about Matrix Composites & Engineering's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Matrix Composites & Engineering

The consensus price target fell 24% to AU$0.29, with the weaker earnings outlook clearly leading analyst valuation estimates.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 34% by the end of 2025. This indicates a significant reduction from annual growth of 30% 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 4.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Matrix Composites & Engineering is expected to lag the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Matrix Composites & Engineering. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Matrix Composites & Engineering's revenues are expected to grow slower than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Matrix Composites & Engineering going forwards.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Matrix Composites & Engineering's business, like concerns around earnings quality. For more information, you can click here to discover this and the 1 other warning sign we've identified.

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 with high insider ownership.

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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.