Time To Worry? Analysts Just Downgraded Their Applied Digital Corporation (NASDAQ:APLD) Outlook

One thing we could say about the analysts on Applied Digital Corporation (NASDAQ:APLD) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the latest consensus from Applied Digital's six analysts is for revenues of US$307m in 2025, which would reflect a huge 113% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 35% to US$0.48. Previously, the analysts had been modelling revenues of US$589m and earnings per share (EPS) of US$0.58 in 2025. There looks to have been a major change in sentiment regarding Applied Digital's prospects, with a sizeable cut to revenues and the analysts now forecasting a loss instead of a profit.

View our latest analysis for Applied Digital

The consensus price target fell 35% to US$8.71, implicitly signalling that lower earnings per share are a leading indicator for Applied Digital's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Applied Digital's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Applied Digital's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 83% growth on an annualised basis. This is compared to a historical growth rate of 122% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.2% annually. So it's pretty clear that, while Applied Digital's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that analysts are expecting Applied Digital to become unprofitable 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Applied Digital analysts - going out to 2026, 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.