Time To Worry? Analysts Are Downgrading Their BuzzFeed, Inc. (NASDAQ:BZFD) Outlook

Market forces rained on the parade of BuzzFeed, Inc. (NASDAQ:BZFD) shareholders today, when the analysts downgraded their forecasts for this year. 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 BuzzFeed recently, with the stock price up a worthy 14% to US$2.15 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.

Following this downgrade, BuzzFeed's three analysts are forecasting 2022 revenues to be US$435m, approximately in line with the last 12 months. Per-share losses are expected to explode, reaching US$0.58 per share. However, before this estimates update, the consensus had been expecting revenues of US$489m and US$0.34 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for BuzzFeed

The consensus price target fell 42% to US$3.00, implicitly signalling that lower earnings per share are a leading indicator for BuzzFeed'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. The most optimistic BuzzFeed analyst has a price target of US$4.00 per share, while the most pessimistic values it at US$2.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that BuzzFeed's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 0.3% growth on an annualised basis. This is compared to a historical growth rate of 21% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. Factoring in the forecast slowdown in growth, it seems obvious that BuzzFeed is also expected to grow slower than other industry participants.

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. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of BuzzFeed.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for BuzzFeed going out to 2024, and you can see them 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.

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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.