Analysts Are More Bearish On Forge Global Holdings, Inc. (NYSE:FRGE) Than They Used To Be

Market forces rained on the parade of Forge Global Holdings, Inc. (NYSE:FRGE) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the current consensus from Forge Global Holdings' five analysts is for revenues of US$81m in 2023 which - if met - would reflect a decent 17% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 27% to US$0.47. However, before this estimates update, the consensus had been expecting revenues of US$91m and US$0.34 per share in losses. 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.

See our latest analysis for Forge Global Holdings

There was no major change to the consensus price target of US$3.48, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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. Currently, the most bullish analyst values Forge Global Holdings at US$8.00 per share, while the most bearish prices it at US$1.75. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Forge Global Holdings' revenue growth is expected to slow, with the forecast 17% annualised growth rate until the end of 2023 being well below the historical 23% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.3% annually. Even after the forecast slowdown in growth, it seems obvious that Forge Global Holdings is also expected to grow faster than 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 Forge Global Holdings. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Forge Global Holdings.

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 Forge Global Holdings 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.

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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.