Analysts Just Made A Major Revision To Their New Fortress Energy Inc. (NASDAQ:NFE) Revenue Forecasts

Today is shaping up negative for New Fortress Energy Inc. (NASDAQ:NFE) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the latest consensus from New Fortress Energy's five analysts is for revenues of US$1.2b in 2021, which would reflect a huge 175% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$1.4b of revenue in 2021. The consensus view seems to have become more pessimistic on New Fortress Energy, noting the substantial drop in revenue estimates in this update.

See our latest analysis for New Fortress Energy

We'd point out that there was no major changes to their price target of US$61.22, suggesting the latest estimates were not enough to shift their view on the value of the business. 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 New Fortress Energy, with the most bullish analyst valuing it at US$70.00 and the most bearish at US$45.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that New Fortress Energy's rate of growth is expected to accelerate meaningfully, with the forecast 175% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 57% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that New Fortress Energy is expected to grow much faster than its industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for New Fortress Energy this year. Analysts also expect revenues to grow faster than the wider market. 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 New Fortress Energy after today.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with New Fortress Energy's business, like a short cash runway. For more information, you can click here to discover this and the 1 other flag we've identified.

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