Analyst Forecasts Just Became More Bearish On Digital Ally, Inc. (NASDAQ:DGLY)
The analysts covering Digital Ally, Inc. (NASDAQ:DGLY) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
After this downgrade, Digital Ally's two analysts are now forecasting revenues of US$45m in 2022. This would be a sizeable 25% improvement in sales compared to the last 12 months. After this downgrade, the company is anticipated to report a loss of US$0.47 in 2022, a sharp decline from a profit over the last year. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$53m and losses of US$0.43 per share in 2022. 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.
See our latest analysis for Digital Ally
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 Digital Ally's rate of growth is expected to accelerate meaningfully, with the forecast 56% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 13% 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 6.8% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Digital Ally to grow faster than 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 Digital Ally. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Digital Ally 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 Digital Ally's financials, such as its declining profit margins. For more information, you can click here to discover this and the 3 other warning signs 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 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.
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