The latest analyst coverage could presage a bad day for Olaplex Holdings, Inc. (NASDAQ:OLPX), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. The stock price has risen 5.0% to US$2.75 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
Following the latest downgrade, the eleven analysts covering Olaplex Holdings provided consensus estimates of US$450m revenue in 2023, which would reflect a considerable 15% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$571m in 2023. The consensus view seems to have become more pessimistic on Olaplex Holdings, noting the pretty serious reduction to revenue estimates in this update.
The consensus price target fell 34% to US$3.85, with the analysts clearly less optimistic about Olaplex Holdings' valuation following this update.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing that stands out from these estimates is that revenues are expected to keep falling until the end of 2023, roughly in line with the historical decline of 27% per annum over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 6.8% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Olaplex Holdings to suffer worse than the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Olaplex Holdings this year. They also expect company revenue to perform worse 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 Olaplex Holdings' future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Olaplex Holdings going forwards.
Want more information? At least one of Olaplex Holdings' eleven analysts has provided estimates out to 2025, which can be seen for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.