Analysts Have Lowered Expectations For BigBear.ai Holdings, Inc. (NYSE:BBAI) After Its Latest Results

As you might know, BigBear.ai Holdings, Inc. (NYSE:BBAI) last week released its latest annual, and things did not turn out so great for shareholders. Revenues missed expectations somewhat, coming in at US$158m, but statutory earnings fell catastrophically short, with a loss of US$1.10 some 51% larger than what the analysts had predicted. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for BigBear.ai Holdings

Following the latest results, BigBear.ai Holdings' four analysts are now forecasting revenues of US$170.1m in 2025. This would be a satisfactory 7.5% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 79% to US$0.21. Before this earnings announcement, the analysts had been modelling revenues of US$193.7m and losses of US$0.19 per share in 2025. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

The average price target fell 7.9% to US$4.38, implicitly signalling that lower earnings per share are a leading indicator for BigBear.ai Holdings' 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. Currently, the most bullish analyst values BigBear.ai Holdings at US$6.00 per share, while the most bearish prices it at US$1.50. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. We would highlight that BigBear.ai Holdings' revenue growth is expected to slow, with the forecast 7.5% annualised growth rate until the end of 2025 being well below the historical 10% 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 9.1% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than BigBear.ai Holdings.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at BigBear.ai Holdings. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for BigBear.ai Holdings going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 4 warning signs for BigBear.ai Holdings you should be aware of, and 1 of them is a bit unpleasant.

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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.