Yahoo Finance What You Need To Know About The mCloud Technologies Corp. (CVE:MCLD) Analyst Downgrade Today
One thing we could say about the analysts on mCloud Technologies Corp. (CVE:MCLD) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
After this downgrade, mCloud Technologies' twin analysts are now forecasting revenues of CA$57m in 2022. This would be a major 83% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing CA$69m of revenue in 2022. The consensus view seems to have become more pessimistic on mCloud Technologies, noting the substantial drop in revenue estimates in this update.
View our latest analysis for mCloud Technologies
The consensus price target fell 26% to CA$10.00, with the analysts clearly less optimistic about mCloud Technologies' valuation following this update.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that mCloud Technologies' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 62% growth on an annualised basis. This is compared to a historical growth rate of 78% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 14% per year. So it's pretty clear that, while mCloud Technologies' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for next year. The analysts also expect revenues to grow faster than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on mCloud Technologies after today.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with mCloud Technologies' business, like major dilution from new stock issuance in the past year. For more information, you can click here to discover this and the 3 other risks we've identified.
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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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