Today is shaping up negative for Local Bounti Corporation (NYSE:LOCL) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Investors however, have been notably more optimistic about Local Bounti recently, with the stock price up a noteworthy 12% to US$2.91 in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.
Following the downgrade, the current consensus from Local Bounti's two analysts is for revenues of US$62m in 2024 which - if met - would reflect a substantial 124% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 48% to US$7.83 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$71m and losses of US$7.66 per share in 2024. 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Local Bounti's rate of growth is expected to accelerate meaningfully, with the forecast 124% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 102% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Local Bounti to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Local Bounti going forwards.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Local Bounti's business, like a short cash runway. Learn more, and discover the 3 other concerns 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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