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Market forces rained on the parade of Local Bounti Corporation (NYSE:LOCL) shareholders today, when the analysts downgraded their forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
Following the downgrade, the current consensus from Local Bounti's two analysts is for revenues of US$81m in 2025 which - if met - would reflect a substantial 132% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 64% to US$6.16. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$95m and losses of US$5.16 per share in 2025. 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.
Check out our latest analysis for Local Bounti
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Local Bounti's rate of growth is expected to accelerate meaningfully, with the forecast 96% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 66% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.7% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Local Bounti is expected to grow much faster than its industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Local Bounti. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the serious cut to next year's outlook, it's clear that analysts have turned more bearish on Local Bounti, and we wouldn't blame shareholders for feeling a little more cautious themselves.
There might be good reason for analyst bearishness towards Local Bounti, like a short cash runway. Learn more, and discover the 3 other flags we've identified, for 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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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.