Local Bounti Corporation (NYSE:LOCL) Analysts Are Cutting Their Estimates: Here's What You Need To Know

Local Bounti Corporation (NYSE:LOCL) missed earnings with its latest third-quarter results, disappointing overly-optimistic forecasters. It was a pretty negative result overall, with revenues of US$6.3m missing analyst predictions by 2.2%. Additionally, the business reported a statutory loss of US$0.30 per share, larger than the analysts had forecast prior to the result. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Our analysis indicates that LOCL is potentially undervalued!

Taking into account the latest results, the most recent consensus for Local Bounti from five analysts is for revenues of US$56.8m in 2023 which, if met, would be a sizeable 332% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 21% to US$0.86. Before this latest report, the consensus had been expecting revenues of US$62.1m and US$0.85 per share in losses.

The average price target fell 12% to US$8.95, with the analysts clearly concerned about the weaker revenue outlook and expectation of ongoing losses. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Local Bounti, with the most bullish analyst valuing it at US$13.00 and the most bearish at US$2.75 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Local Bounti's rate of growth is expected to accelerate meaningfully, with the forecast 222% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 144% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.5% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Local Bounti to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Local Bounti's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Local Bounti going out to 2024, and you can see them free on our platform here..

It is also worth noting that we have found 2 warning signs for Local Bounti (1 is concerning!) that you need to take into consideration.

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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.