Time To Worry? Analysts Are Downgrading Their Frontier Developments plc (LON:FDEV) Outlook

The analysts covering Frontier Developments plc (LON:FDEV) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the latest downgrade, the current consensus, from the twelve analysts covering Frontier Developments, is for revenues of UK£90m in 2024, which would reflect an uncomfortable 14% reduction in Frontier Developments' sales over the past 12 months. Losses are predicted to fall substantially, shrinking 53% to UK£0.26 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of UK£106m and losses of UK£0.20 per share in 2024. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Frontier Developments

The consensus price target fell 19% to UK£3.82, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Frontier Developments' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 14% by the end of 2024. This indicates a significant reduction from annual growth of 14% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.4% per year. It's pretty clear that Frontier Developments' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Frontier Developments' revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Frontier Developments.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Frontier Developments going out to 2026, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.