Time To Worry? Analysts Just Downgraded Their HyreCar Inc. (NASDAQ:HYRE) Outlook

The analysts covering HyreCar Inc. (NASDAQ:HYRE) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Investors however, have been notably more optimistic about HyreCar recently, with the stock price up a whopping 34% to US$2.96 in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the downgrade, the current consensus from HyreCar's five analysts is for revenues of US$45m in 2022 which - if met - would reflect a substantial 26% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 21% to US$0.94. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$56m and losses of US$0.86 per share in 2022. 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 HyreCar

The consensus price target fell 57% to US$7.05, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values HyreCar at US$8.00 per share, while the most bearish prices it at US$6.00. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

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 HyreCar's revenue growth is expected to slow, with the forecast 26% annualised growth rate until the end of 2022 being well below the historical 46% 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 8.7% annually. So it's pretty clear that, while HyreCar'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 increased their loss per share estimates for this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better 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 HyreCar after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with HyreCar's financials, such as dilutive stock issuance over the past year. For more information, you can click here to discover this and the 4 other warning signs we've identified.

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.