Some Analysts Just Cut Their Digital Turbine, Inc. (NASDAQ:APPS) Estimates

The analysts covering Digital Turbine, Inc. (NASDAQ:APPS) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the current consensus from Digital Turbine's four analysts is for revenues of US$1.5b in 2023 which - if met - would reflect a huge 48% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$1.6b in 2023. It looks like forecasts have become a fair bit less optimistic on Digital Turbine, given the measurable cut to revenue estimates.

Check out our latest analysis for Digital Turbine

Notably, the analysts have cut their price target 8.5% to US$85.75, suggesting concerns around Digital Turbine's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Digital Turbine, with the most bullish analyst valuing it at US$117 and the most bearish at US$51.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the 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. We would highlight that Digital Turbine's revenue growth is expected to slow, with the forecast 37% annualised growth rate until the end of 2023 being well below the historical 59% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 14% annually. Even after the forecast slowdown in growth, it seems obvious that Digital Turbine is also expected to grow faster than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Digital Turbine next year. They're also forecasting more rapid revenue growth than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Digital Turbine after today.

That said, the analysts might have good reason to be negative on Digital Turbine, given recent substantial insider selling. Learn more, and discover the 5 other warning signs we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.