Downgrade: Here's How Analysts See Markforged Holding Corporation (NYSE:MKFG) Performing In The Near Term

The analysts covering Markforged Holding Corporation (NYSE:MKFG) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

After the downgrade, the seven analysts covering Markforged Holding are now predicting revenues of US$119m in 2023. If met, this would reflect a sizeable 21% improvement in sales compared to the last 12 months. Losses are supposed to balloon 458% to US$0.33 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$137m and losses of US$0.26 per share in 2023. 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 the opportunities and risks within the US Machinery industry.

The consensus price target fell 25% to US$2.73, implicitly signalling that lower earnings per share are a leading indicator for Markforged Holding's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Markforged Holding, with the most bullish analyst valuing it at US$4.00 and the most bearish at US$1.70 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. The analysts are definitely expecting Markforged Holding's growth to accelerate, with the forecast 17% annualised growth to the end of 2023 ranking favourably alongside historical growth of 13% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.3% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Markforged Holding to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Markforged Holding analysts - going out to 2024, and you can see them 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.