Forge Global Holdings, Inc. (NYSE:FRGE) Just Reported, And Analysts Assigned A US$3.23 Price Target

Shareholders of Forge Global Holdings, Inc. (NYSE:FRGE) will be pleased this week, given that the stock price is up 13% to US$1.60 following its latest first-quarter results. Revenues of US$15m came in 7.5% below estimates, but statutory losses were well contained with a per-share loss of US$0.12 being some 15% smaller than what the analysts were predicting. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Forge Global Holdings

Taking into account the latest results, the current consensus from Forge Global Holdings' five analysts is for revenues of US$79.9m in 2023, which would reflect a huge 23% increase on its sales over the past 12 months. Per-share losses are predicted to creep up to US$0.41. Before this latest report, the consensus had been expecting revenues of US$80.2m and US$0.48 per share in losses. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading revenues and making a favorable reduction in losses per share in particular.

The consensus price target fell 7.2% to US$3.23despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on valuations. 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 Forge Global Holdings analyst has a price target of US$7.00 per share, while the most pessimistic values it at US$1.75. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Forge Global Holdings' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 32% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 44% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 8.8% per year. Not only are Forge Global Holdings' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that 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 Forge Global Holdings going out to 2025, and you can see them free on our platform here..

Even so, be aware that Forge Global Holdings is showing 3 warning signs in our investment analysis , you should know about...

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.