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The analyst covering Hall of Fame Resort & Entertainment Company (NASDAQ:HOFV) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as the analyst signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the most recent consensus for Hall of Fame Resort & Entertainment from its sole analyst is for revenues of US$29m in 2024 which, if met, would be a meaningful 18% increase on its sales over the past 12 months. Losses are presumed to reduce, shrinking 18% per share from last year to US$8.82. However, before this estimates update, the consensus had been expecting revenues of US$40m and US$8.70 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analyst 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 Hall of Fame Resort & Entertainment
the analyst has cut their price target 33% to US$8.00 per share, signalling that the declining revenue and ongoing losses are contributing to the lower 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 Hall of Fame Resort & Entertainment's revenue growth is expected to slow, with the forecast 18% annualised growth rate until the end of 2024 being well below the historical 28% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.7% annually. Even after the forecast slowdown in growth, it seems obvious that Hall of Fame Resort & Entertainment is also expected to grow faster than the wider industry.
The Bottom Line
While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Hall of Fame Resort & Entertainment after today.
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 Hall of Fame Resort & Entertainment's business, like dilutive stock issuance over the past year. Learn more, and discover the 2 other flags we've identified, for free on our platform here.