The latest analyst coverage could presage a bad day for Redbox Entertainment Inc. (NASDAQ:RDBX), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Bidders are definitely seeing a different story, with the stock price of US$2.28 reflecting a 12% rise in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

Following the downgrade, the most recent consensus for Redbox Entertainment from its four analysts is for revenues of US$639m in 2022 which, if met, would be a substantial 115% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$828m in 2022. It looks like forecasts have become a fair bit less optimistic on Redbox Entertainment, given the sizeable cut to revenue estimates.

View our latest analysis for Redbox Entertainment

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that Redbox Entertainment's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 84% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 51% a year 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 12% annually. Not only are Redbox Entertainment's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Redbox Entertainment next year. They're also forecasting more rapid revenue growth than the wider market. 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 Redbox Entertainment after today.

Want to learn more? We have estimates for Redbox Entertainment from its four analysts out until 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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