There's been a major selloff in SurgePays, Inc. (NASDAQ:SURG) shares in the week since it released its quarterly report, with the stock down 21% to US$1.90. It was a pretty bad result overall; while revenues were in line with expectations at US$15m, statutory losses exploded to US$0.66 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on SurgePays after the latest results.
Taking into account the latest results, the dual analysts covering SurgePays provided consensus estimates of US$68.6m revenue in 2024, which would reflect a concerning 39% decline over the past 12 months. The statutory loss per share is expected to greatly reduce in the near future, narrowing 1,263% to US$1.06. Before this earnings report, the analysts had been forecasting revenues of US$100.4m and earnings per share (EPS) of US$0.005 in 2024. So we can see that the consensus has become notably more bearish on SurgePays' outlook following these results, with a pretty serious reduction to next year's revenue estimates. Furthermore, they expect the business to be loss-making next year, compared to their previous calls for a profit.
The consensus price target fell 15% to US$5.75, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 63% by the end of 2024. This indicates a significant reduction from annual growth of 35% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - SurgePays is expected to lag the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for SurgePays dropped from profits to a loss next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse 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 SurgePays' future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on SurgePays. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 5 warning signs with SurgePays , 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.