Analysts Just Made A Major Revision To Their Virtu Financial, Inc. (NASDAQ:VIRT) Revenue Forecasts
Today is shaping up negative for Virtu Financial, Inc. (NASDAQ:VIRT) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the latest downgrade, the seven analysts covering Virtu Financial provided consensus estimates of US$1.3b revenue in 2023, which would reflect a sizeable 44% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$1.4b in 2023. The consensus view seems to have become more pessimistic on Virtu Financial, noting the substantial drop in revenue estimates in this update.
View our latest analysis for Virtu Financial
The consensus price target fell 8.0% to US$23.97, with the analysts clearly less optimistic about Virtu Financial's valuation following this update. 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. There are some variant perceptions on Virtu Financial, with the most bullish analyst valuing it at US$30.00 and the most bearish at US$19.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 37% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 23% 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 6.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Virtu Financial is expected to lag the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Virtu Financial next year. They also expect company revenue to perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Virtu Financial's future valuation. 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 Virtu Financial after today.
Want to learn more? At least one of Virtu Financial's seven analysts has provided estimates out to 2024, which can be seen 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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