Today is shaping up negative for Star Equity Holdings, Inc. (NASDAQ:STRR) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. Surprisingly the share price has been buoyant, rising 12% to US$4.51 in the past 7 days. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the downgrade, the current consensus from Star Equity Holdings' two analysts is for revenues of US$53m in 2024 which - if met - would reflect a solid 12% increase on its sales over the past 12 months. Losses are expected to increase slightly, to US$2.70 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$63m and losses of US$0.95 per share in 2024. 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 expecting losses per share to increase.

Check out our latest analysis for Star Equity Holdings

There was no major change to the consensus price target of US$24.00, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Star Equity Holdings' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 24% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 11% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 5.8% per year. So it looks like Star Equity Holdings is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Star Equity Holdings. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Star Equity Holdings after the downgrade.