Dingdong (Cayman) Limited (NYSE:DDL) Analysts Just Trimmed Their Revenue Forecasts By 13%
Market forces rained on the parade of Dingdong (Cayman) Limited (NYSE:DDL) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the consensus from eight analysts covering Dingdong (Cayman) is for revenues of CN¥23b in 2023, implying a discernible 3.4% decline in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing CN¥26b of revenue in 2023. It looks like forecasts have become a fair bit less optimistic on Dingdong (Cayman), given the substantial drop in revenue estimates.
See our latest analysis for Dingdong (Cayman)
There was no particular change to the consensus price target of CN¥43.43, with Dingdong (Cayman)'s latest outlook seemingly not enough to result in a change of valuation. 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. Currently, the most bullish analyst values Dingdong (Cayman) at CN¥7.49 per share, while the most bearish prices it at CN¥2.60. This is a very narrow spread of estimates, implying either that Dingdong (Cayman) is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 4.5% by the end of 2023. This indicates a significant reduction from annual growth of 9.2% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.4% annually for the foreseeable future. It's pretty clear that Dingdong (Cayman)'s revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Dingdong (Cayman) after today.
Hungry for more information? We have estimates for Dingdong (Cayman) from its eight analysts out until 2025, 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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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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