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Things Look Grim For BuzzFeed, Inc. (NASDAQ:BZFD) After Today's Downgrade
The analysts covering BuzzFeed, Inc. (NASDAQ:BZFD) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the latest downgrade, the current consensus, from the three analysts covering BuzzFeed, is for revenues of US$390m in 2023, which would reflect an uneasy 11% reduction in BuzzFeed's sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 64% to US$0.52. However, before this estimates update, the consensus had been expecting revenues of US$462m and US$0.45 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
View our latest analysis for BuzzFeed
The consensus price target fell 18% to US$1.77, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. The most optimistic BuzzFeed analyst has a price target of US$2.00 per share, while the most pessimistic values it at US$1.50. This is a very narrow spread of estimates, implying either that BuzzFeed is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 11% by the end of 2023. This indicates a significant reduction from annual growth of 14% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.1% annually for the foreseeable future. It's pretty clear that BuzzFeed's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that BuzzFeed's revenues are expected to grow slower 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 BuzzFeed's business, like dilutive stock issuance over the past year. Learn more, and discover the 2 other flags 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 that insiders are buying.
What are the risks and opportunities for BuzzFeed?
BuzzFeed, Inc., a digital media company, distributes content across owned and operated, as well as third-party platforms.
Rewards
Trading at 57% below our estimate of its fair value
Risks
Highly volatile share price over the past 3 months
Shareholders have been diluted in the past year
Currently unprofitable and not forecast to become profitable over the next 3 years
Further research on
BuzzFeed
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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.
About NasdaqGM:BZFD
BuzzFeed
BuzzFeed, Inc., a digital media company, distributes content across owned and operated, as well as third-party platforms.
Very undervalued with imperfect balance sheet.
