Sleep Number Corporation Analysts Are Pretty Bullish On The Stock After Recent Results
It's been a good week for Sleep Number Corporation (NASDAQ:SNBR) shareholders, because the company has just released its latest full-year results, and the shares gained 7.1% to US$59.72. The result was positive overall - although revenues of US$1.7b were in line with what analysts predicted, Sleep Number surprised by delivering a statutory profit of US$2.70 per share, modestly greater than expected. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
See our latest analysis for Sleep Number
Following the latest results, Sleep Number's seven analysts are now forecasting revenues of US$1.85b in 2020. This would be a notable 8.8% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to expand 12% to US$3.10. Before this earnings report, analysts had been forecasting revenues of US$1.80b and earnings per share (EPS) of US$2.95 in 2020. So there seems to have been a moderate uplift in analyst sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
It will come as no surprise to learn that analysts have increased their price target for Sleep Number 16% to US$52.50 on the back of these upgrades. 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 Sleep Number at US$65.00 per share, while the most bearish prices it at US$33.00. 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.
Further, we can compare these estimates to past performance, and see how Sleep Number forecasts compare to the wider market's forecast performance. Analysts are definitely expecting Sleep Number's growth to accelerate, with the forecast 8.8% growth ranking favourably alongside historical growth of 7.1% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect Sleep Number to grow faster than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Sleep Number's earnings potential next year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Sleep Number going out to 2024, and you can see them free on our platform here.
You can also view our analysis of Sleep Number's balance sheet, and whether we think Sleep Number is carrying too much debt, for free on our platform here.
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