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What You Need To Know About The Blend Labs, Inc. (NYSE:BLND) Analyst Downgrade Today

·3 min read

One thing we could say about the analysts on Blend Labs, Inc. (NYSE:BLND) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the current consensus from Blend Labs' nine analysts is for revenues of US$243m in 2022 which - if met - would reflect a huge 32% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$347m in 2022. The consensus view seems to have become more pessimistic on Blend Labs, noting the pretty serious reduction to revenue estimates in this update.

See our latest analysis for Blend Labs

earnings-and-revenue-growth
earnings-and-revenue-growth

The consensus price target fell 52% to US$6.84, with the analysts clearly less optimistic about Blend Labs' 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 Blend Labs, with the most bullish analyst valuing it at US$28.00 and the most bearish at US$7.50 per share. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the 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. It's pretty clear that there is an expectation that Blend Labs' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 32% growth on an annualised basis. This is compared to a historical growth rate of 118% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 14% per year. So it's pretty clear that, while Blend Labs' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also forecasting more rapid revenue growth 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 Blend Labs' future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Blend Labs going forwards.

Thirsting for more data? We have estimates for Blend Labs from its nine 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.