Solo Brands, Inc. (NYSE:DTC) Just Reported And Analysts Have Been Lifting Their Price Targets
It's been a mediocre week for Solo Brands, Inc. (NYSE:DTC) shareholders, with the stock dropping 11% to US$7.13 in the week since its latest first-quarter results. The results were positive, with revenue coming in at US$88m, beating analyst expectations by 2.5%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Solo Brands
After the latest results, the six analysts covering Solo Brands are now predicting revenues of US$538.6m in 2023. If met, this would reflect an okay 2.9% improvement in sales compared to the last 12 months. Solo Brands is also expected to turn profitable, with statutory earnings of US$0.42 per share. In the lead-up to this report, the analysts had been modelling revenues of US$539.5m and earnings per share (EPS) of US$0.31 in 2023. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the massive increase in earnings per share expectations following these results.
The consensus price target rose 7.0% to US$10.17, suggesting that higher earnings estimates flow through to the stock's valuation as well. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Solo Brands analyst has a price target of US$12.00 per share, while the most pessimistic values it at US$9.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Solo Brands' revenue growth is expected to slow, with the forecast 3.8% annualised growth rate until the end of 2023 being well below the historical 26% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.3% annually. So it's pretty clear that, while Solo Brands' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Solo Brands' earnings potential next year. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Solo Brands analysts - going out to 2025, and you can see them free on our platform here.
You still need to take note of risks, for example - Solo Brands has 1 warning sign we think 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.
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