Market forces rained on the parade of Data I/O Corporation (NASDAQ:DAIO) shareholders today, when the covering analyst downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the solo analyst covering Data I/O, is for revenues of US$24m in 2024, which would reflect a perceptible 2.1% reduction in Data I/O's sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 45% to US$0.09. Before this latest update, the analyst had been forecasting revenues of US$29m and earnings per share (EPS) of US$0.10 in 2024. So we can see that the consensus has become notably more bearish on Data I/O's outlook with these numbers, making a measurable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

Check out our latest analysis for Data I/O

The consensus price target fell 20% to US$4.00, implicitly signalling that lower earnings per share are a leading indicator for Data I/O's valuation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 4.1% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 4.9% 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 7.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Data I/O is expected to lag the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Data I/O dropped from profits to a loss this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Data I/O going out as far as 2025, and you can see them free on our platform here.