Today is shaping up negative for Stem, Inc. (NYSE:STEM) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the latest consensus from Stem's nine analysts is for revenues of US$160m in 2025, which would reflect a solid 11% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 89% to US$0.60 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$321m and losses of US$0.60 per share in 2025. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also making no real change to the loss per share numbers.

See our latest analysis for Stem

the analysts have cut their price target 5.5% to US$1.01 per share, signalling that the declining revenue and ongoing losses are contributing to the lower valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Stem's revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2025 being well below the historical 37% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 8.3% per year. Even after the forecast slowdown in growth, it seems obvious that Stem is also expected to grow faster than the wider industry.

The Bottom Line

Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Stem's future valuation. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Stem 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 Stem analysts - going out to 2027, 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 backed by insiders.

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