Things Look Grim For Agrify Corporation (NASDAQ:AGFY) After Today's Downgrade

Today is shaping up negative for Agrify Corporation (NASDAQ:AGFY) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, the four analysts covering Agrify provided consensus estimates of US$74m revenue in 2022, which would reflect a considerable 15% decline on its sales over the past 12 months. Losses are forecast to hold steady at around US$4.69. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$128m and losses of US$1.31 per share in 2022. 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.

Check out our latest analysis for Agrify

The consensus price target fell 26% to US$4.43, implicitly signalling that lower earnings per share are a leading indicator for Agrify's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Agrify analyst has a price target of US$11.00 per share, while the most pessimistic values it at US$1.20. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Agrify's 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 27% by the end of 2022. This indicates a significant reduction from annual growth of 232% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.5% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Agrify is expected to lag the wider industry.

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 Agrify. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales 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 Agrify.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Agrify's financials, such as dilutive stock issuance over the past year. Learn more, and discover the 4 other concerns 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 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.