National Bank Financial analyst Richard Tse has shifted his view of Farmers Edge (Farmers Edge Stock Quote, Chart, News, Analysts, Financials TSX:FDGE), downgrading his rating to "Sector Perform" from "Outperform" while reducing his target price to $10.00 from $20.00\/share in an update to clients on Friday. Founded in 2005 with its headquarters in Winnipeg, Farmers Edge provides digital agriculture delivering solutions of field-centric data, artificial intelligence and integration with connectivity across the agricultural ecosystem. Tse\u2019s latest analysis comes after Farmers Edge released its second quarter financial results, where he noted the company fell short of National Bank expectations. Farmers Edge reported revenue of $6.2 million for the second quarter, falling well short of the $10.5 million projection set out by both National Bank and the consensus. Tse linked the shortfall to lower levels of subsidies from channel partners in the current quarter, a delay in conversions of the free-trial programs signed in 2020 and to foreign exchange fluctuations. The company\u2019s adjusted EBITDA came in at a $9 million loss, ahead of the consensus estimate of a $10.6 million loss, as well as the National Bank projection of a $11.2 million loss. However, Tse notes that the adjusted EBITDA figures also include an $8.2 million negotiated settlement recovery for a new contract with a satellite imagery provider. Tse pointed to an intentional extension of its free trial on Progressive Grower Program (PGP) acres to provide farmers time to make decisions on Farmers Edge\u2019s Smart Carbon product\/service, lower levels of subsidies from channel partners; and underperformances in Total Subscribed Acres (22.8 million versus NBF's estimate of 25.3 million), ARPA ($1.1\/acre vs. NBF's call for $1.7\/acre) and ARR ($62.4 million versus NBF at $64.5 million). However, Tse notes that the Smart Carbon platform may be positioned as a key catalyst for Farmers Edge\u2019s growth. \u201cThe launch of our Smart Carbon program has been a significant event for the company, positioning us as a leader of aggregating agricultural carbon offsets and supporting our digital platform subscriptions,\u201d said Wade Barnes, CEO and founder of Farmers Edge in the company\u2019s August 12 press release. \u201cThe June launch has created a lot of interest which is evident from having 1.5 million acres under contract for Smart Carbon and we expect to sign up over 1 million more Smart Carbon acres in Canada over the next couple of months. Most growers will also have access to multiple years of carbon offsets to serialize, aggregate and sell in the coming months. This program will generate significant revenue while supporting the environment," Barnes said.\u00a0 \u201cIt is a win-win as growers will get a new carbon revenue stream that may exceed the cost of our top subscription fertility products. An equivalent program for the US customers is being completed and is expected to be operational in 2022,\u201d Barnes added. Farmers Edge also recently announced the acquisition of Indiana-based agricultural product provider CommoditAg, as well as the resignation of David Patrick, the company\u2019s Chief Financial Officer. Tse has revised key financial metrics and valuation data, shifting his revenue projections for 2021 to $46.3 million, a 20.9 per cent decrease from his original projection of $58.5 million, while 2022 revenue projections are now set at $59 million, a 33.5 per cent decrease from Tse\u2019s original projection of $88.8 million. Tse\u2019s new adjusted EBITDA projections paint a similar picture, with Tse now expecting Farmers Edge to produce an adjusted EBITDA loss of $31.1 million, an 18.3 per cent drop from the originally projected $26.3 million adjusted EBITDA loss, while Tse\u2019s 2022 adjusted EBITDA projection now shows a $38.1 million loss, a 57.3 per cent drop from the originally projected $24.2 million adjusted EBITDA loss. Liquidity measures also show negatives in Tse\u2019s projections, with a forecasted $36 million loss in cash from operations in place for 2021, followed by a projected $26 million loss in 2022. Free cash flow projections show similar results, with Tse projecting a $40.3 million loss for 2021, followed by a projected $46.5 million loss in 2022. Valuation data is also limited in Tse\u2019s projections, as he forecasts the EV\/Sales multiple to remain at 3.9x for 2021, then falling to 3x in 2022. Despite still holding a positive long term view of the company, Tse and National Bank are reeling in their expectations for Farmers Edge for the time being. "As we reflect on the shortfall following the Company\u2019s conference call this morning, we continue to believe there\u2019s a significant opportunity in front of this name (long term); however, two consecutive quarters of below-expectation results have heightened execution risk which is further amplified by the CFO departure," Tse wrote. "And while Management pointed to a high degree of confidence in converting ~2\/3 of the free-trial acres by the end of Q4, we\u2019re opting to wait for signs of that accelerated conversion with critical mass given what we\u2019ve seen to date. In light of that, we\u2019re moving to the sidelines and downgrading FDGE from Outperform to Sector Perform in the interim," he said. At press time, Tse's new $10.00 target represented a projected one-year return of 54.1 per cent. Currently, FDGE is down 78 per cent since its debut in March of this year.