Time To Worry? Analysts Are Downgrading Their Motorsport Games Inc. (NASDAQ:MSGM) Outlook
One thing we could say about the analysts on Motorsport Games Inc. (NASDAQ:MSGM) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.
Following the downgrade, the most recent consensus for Motorsport Games from its three analysts is for revenues of US$11m in 2023 which, if met, would be a credible 5.4% increase on its sales over the past 12 months. Losses are expected to increase substantially, hitting US$14.84 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$20m and losses of US$6.23 per share in 2023. 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.
Check out our latest analysis for Motorsport Games
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. One thing stands out from these estimates, which is that Motorsport Games is forecast to grow faster in the future than it has in the past, with revenues expected to display 5.4% annualised growth until the end of 2023. If achieved, this would be a much better result than the 6.4% annual decline over the past three years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 8.5% annually for the foreseeable future. Although Motorsport Games' revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Motorsport Games' revenues are expected to grow slower than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on Motorsport Games, and their negativity could be grounds for caution.
That said, the analysts might have good reason to be negative on Motorsport Games, given major dilution from new stock issuance in the past year. Learn more, and discover the 2 other risks we've identified, for 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.
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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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