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Bearish: Analysts Just Cut Their BuzzFeed, Inc. (NASDAQ:BZFD) Revenue and EPS estimates

The analysts covering BuzzFeed, Inc. (NASDAQ:BZFD) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the latest downgrade, the three analysts covering BuzzFeed provided consensus estimates of US$390m revenue in 2023, which would reflect a considerable 11% decline on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 64% to US$0.52. Yet before this consensus update, the analysts had been forecasting revenues of US$462m and losses of US$0.45 per share in 2023. 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.

Check out our latest analysis for BuzzFeed

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earnings-and-revenue-growth

The consensus price target fell 18% to US$1.77, implicitly signalling that lower earnings per share are a leading indicator for BuzzFeed's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on BuzzFeed, with the most bullish analyst valuing it at US$2.00 and the most bearish at US$1.50 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 11% by the end of 2023. This indicates a significant reduction from annual growth of 14% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 8.8% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - BuzzFeed is expected to lag the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at BuzzFeed. 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.

That said, the analysts might have good reason to be negative on BuzzFeed, given dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other flags 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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