Marathon Digital Holdings, Inc. (NASDAQ:MARA) just released its latest quarterly report and things are not looking great. It definitely looks like a negative result overall with revenues falling 16% short of analyst estimates at US$25m. Statutory losses were US$1.75 per share, 344% bigger than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, Marathon Digital Holdings' eight analysts are now forecasting revenues of US$197.6m in 2022. This would be a modest 4.8% improvement in sales compared to the last 12 months. Per-share losses are supposed to see a sharp uptick, reaching US$2.08. Before this latest report, the consensus had been expecting revenues of US$244.4m and US$0.53 per share in losses. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.
The average price target was broadly unchanged at US$18.50, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Marathon Digital Holdings at US$35.00 per share, while the most bearish prices it at US$7.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Marathon Digital Holdings' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 9.7% growth on an annualised basis. This is compared to a historical growth rate of 90% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 13% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Marathon Digital Holdings.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Marathon Digital Holdings. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Marathon Digital Holdings analysts - going out to 2024, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Marathon Digital Holdings (at least 1 which doesn't sit too well with us) , and understanding them should be part of your investment process.
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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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