Earnings Release: Here's Why Analysts Cut Their Olo Inc. (NYSE:OLO) Price Target To US$18.80
It's been a good week for Olo Inc. (NYSE:OLO) shareholders, because the company has just released its latest quarterly results, and the shares gained 4.9% to US$11.21. The results don't look great, especially considering that statutory losses grew 82% toUS$0.07 per share. Revenues of US$43m did beat expectations by 2.6%, but it looks like a bit of a cold comfort. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Check out our latest analysis for Olo
After the latest results, the six analysts covering Olo are now predicting revenues of US$195.6m in 2022. If met, this would reflect a huge 25% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 22% to US$0.13. Before this latest report, the consensus had been expecting revenues of US$193.8m and US$0.067 per share in losses. So it's pretty clear the analysts have mixed opinions on Olo even after this update; although they reconfirmed their revenue numbers, it came at the cost of a regrettable increase in per-share losses.
With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 13% to US$18.80, with the analysts signalling that growing losses would be a definite concern. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Olo analyst has a price target of US$26.00 per share, while the most pessimistic values it at US$12.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of Olo'shistorical trends, as the 35% annualised revenue growth to the end of 2022 is roughly in line with the 32% annual revenue growth over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 14% per year. So it's pretty clear that Olo is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Olo. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Olo going out to 2023, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 4 warning signs for Olo that you should be aware of.
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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.
