One thing we could say about the analysts on Stem, Inc. (NYSE:STEM) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. 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 latest consensus from Stem's twelve analysts is for revenues of US$465m in 2025, which would reflect a substantial 81% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 88% to US$0.62 per share. However, before this estimates update, the consensus had been expecting revenues of US$551m and US$0.56 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Stem

The consensus price target was broadly unchanged at US$2.07, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Stem's growth to accelerate, with the forecast 61% annualised growth to the end of 2025 ranking favourably alongside historical growth of 45% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.4% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Stem is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected next year, we wouldn't be surprised if investors were a bit wary of Stem.

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 Stem's business, like dilutive stock issuance over the past year. Learn more, and discover the 3 other concerns we've identified, for 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 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.