Analysts Just Slashed Their FG Nexus Inc. (NASDAQ:FGNX) Earnings Forecasts

Today is shaping up negative for FG Nexus Inc. (NASDAQ:FGNX) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business. Investors however, have been notably more optimistic about FG Nexus recently, with the stock price up a noteworthy 11% to US$2.88 in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

After the downgrade, the three analysts covering FG Nexus are now predicting revenues of US$29m in 2026. If met, this would reflect a sizeable 66% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 53% to US$0.16 per share. Prior to this update, the analysts had been forecasting revenues of US$47m and earnings per share (EPS) of US$0.20 in 2026. So we can see that the consensus has become notably more bearish on FG Nexus' outlook with these numbers, making a sizeable cut to next year's revenue estimates. Furthermore, they expect the business to be loss-making next year, compared to their previous forecasts of a profit.

See our latest analysis for FG Nexus

The consensus price target fell 9.4% to US$9.67, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that FG Nexus is forecast to grow faster in the future than it has in the past, with revenues expected to display 50% annualised growth until the end of 2026. If achieved, this would be a much better result than the 8.8% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 5.0% annually. Not only are FG Nexus' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for FG Nexus dropped from profits to a loss next year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

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 FG Nexus' business, like major dilution from new stock issuance in the past year. Learn more, and discover the 1 other concern we've identified, for 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 backed by insiders.

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.