Earnings Release: Here's Why Analysts Cut Their Genius Sports Limited (NYSE:GENI) Price Target To US$21.50
Shareholders in Genius Sports Limited (NYSE:GENI) had a terrible week, as shares crashed 31% to US$9.91 in the week since its latest third-quarter results. Results overall weren't great; even though revenues of US$69m beat expectations by 10%, statutory losses ballooned to US$0.37 per share, substantially worse than the analysts had expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
See our latest analysis for Genius Sports
Following the latest results, Genius Sports' eight analysts are now forecasting revenues of US$344.5m in 2022. This would be a huge 53% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 80% to US$0.57. Before this earnings announcement, the analysts had been modelling revenues of US$343.3m and losses of US$0.23 per share in 2022. So it's pretty clear the analysts have mixed opinions on Genius Sports even after this update; although they reconfirmed their revenue numbers, it came at the cost of a massive increase in per-share losses.
The consensus price target fell 24% to US$21.50per share, with the analysts clearly concerned by ballooning losses. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Genius Sports analyst has a price target of US$27.00 per share, while the most pessimistic values it at US$15.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Genius Sports shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Genius Sports' growth to accelerate, with the forecast 40% annualised growth to the end of 2022 ranking favourably alongside historical growth of 30% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Genius Sports to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Genius Sports' future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Genius Sports going out to 2023, and you can see them free on our platform here..
You still need to take note of risks, for example - Genius Sports has 2 warning signs we think you should be aware of.
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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