These Analysts Just Made An Downgrade To Their Barfresh Food Group, Inc. (NASDAQ:BRFH) EPS Forecasts

The latest analyst coverage could presage a bad day for Barfresh Food Group, Inc. (NASDAQ:BRFH), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the downgrade, the latest consensus from Barfresh Food Group's two analysts is for revenues of US$17m in 2023, which would reflect a sizeable 63% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 72% to US$0.09. Previously, the analysts had been modelling revenues of US$27m and earnings per share (EPS) of US$0.17 in 2023. There looks to have been a major change in sentiment regarding Barfresh Food Group's prospects, with a sizeable cut to revenues and the analysts now forecasting a loss instead of a profit.

Our analysis indicates that BRFH is potentially overvalued!

The consensus price target fell 50% to US$5.25, implicitly signalling that lower earnings per share are a leading indicator for Barfresh Food Group's valuation. 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. Currently, the most bullish analyst values Barfresh Food Group at US$5.50 per share, while the most bearish prices it at US$5.00. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Barfresh Food Group's past performance and to peers in the same industry. It's clear from the latest estimates that Barfresh Food Group's rate of growth is expected to accelerate meaningfully, with the forecast 48% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 25% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.4% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Barfresh Food Group to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts are expecting Barfresh Food Group to become unprofitable next year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Barfresh Food Group.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Barfresh Food Group's financials, such as a short cash runway. Learn more, and discover the 3 other flags we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.