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Downgrade: Here's How Analysts See Cardlytics, Inc. (NASDAQ:CDLX) Performing In The Near Term

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Simply Wall St
·3 min read
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Today is shaping up negative for Cardlytics, Inc. (NASDAQ:CDLX) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the eight analysts covering Cardlytics, is for revenues of US$187m in 2020, which would reflect a not inconsiderable 15% reduction in Cardlytics' sales over the past 12 months. Per-share losses are expected to explode, reaching US$1.60 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$220m and losses of US$0.85 per share in 2020. 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 Cardlytics

NasdaqGM:CDLX Past and Future Earnings May 15th 2020
NasdaqGM:CDLX Past and Future Earnings May 15th 2020

There was no major change to the consensus price target of US$47.60, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Cardlytics at US$55.00 per share, while the most bearish prices it at US$26.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Cardlytics' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 15% revenue decline a notable change from historical growth of 20% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.4% next year. It's pretty clear that Cardlytics' revenues are expected to perform substantially worse 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. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Cardlytics after the downgrade.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Cardlytics analysts - going out to 2024, and you can see them free on our platform here.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.