Time To Worry? Analysts Just Downgraded Their Nerdy, Inc. (NYSE:NRDY) Outlook

Market forces rained on the parade of Nerdy, Inc. (NYSE:NRDY) shareholders today, when the analysts downgraded their forecasts for next year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

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Following the downgrade, the latest consensus from Nerdy's six analysts is for revenues of US$183m in 2026, which would reflect a reasonable 3.0% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 36% to US$0.21 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$213m and losses of US$0.19 per share in 2026. 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 Nerdy

The consensus price target fell 12% to US$1.79, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Nerdy's revenue growth is expected to slow, with the forecast 2.4% annualised growth rate until the end of 2026 being well below the historical 10% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 9.8% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Nerdy.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower 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. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Nerdy after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Nerdy, including recent substantial insider selling. Learn more, and discover the 2 other warning signs 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.