Today is shaping up negative for Local Bounti Corporation (NYSE:LOCL) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
Following the downgrade, the latest consensus from Local Bounti's twin analysts is for revenues of US$81m in 2025, which would reflect a substantial 132% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 64% to US$6.16 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$95m and losses of US$5.16 per share in 2025. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Local Bounti's rate of growth is expected to accelerate meaningfully, with the forecast 96% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 66% p.a. over the past five 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. Factoring in the forecast acceleration in revenue, it's pretty clear that Local Bounti is expected to grow much faster than its industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Local Bounti. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the serious cut to next year's outlook, it's clear that analysts have turned more bearish on Local Bounti, and we wouldn't blame shareholders for feeling a little more cautious themselves.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Local Bounti, including a short cash runway. For more information, you can click here to discover this and the 3 other risks we've identified.
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 with high insider ownership.
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.
