LARK Distilling Co. Ltd. (ASX:LRK) Just Reported Earnings, And Analysts Cut Their Target Price

LARK Distilling Co. Ltd. (ASX:LRK) defied analyst predictions to release its yearly results, which were ahead of market expectations. Results overall were credible, with revenues arriving 7.9% better than analyst forecasts at AU$17m. Higher revenues also resulted in lower statutory losses, which were AU$0.06 per share, some 7.9% smaller than the analysts expected. 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.

View our latest analysis for LARK Distilling

Following the recent earnings report, the consensus from three analysts covering LARK Distilling is for revenues of AU$15.5m in 2025. This implies a noticeable 7.2% decline in revenue compared to the last 12 months. Losses are expected to increase slightly, to AU$0.057 per share. Before this earnings announcement, the analysts had been modelling revenues of AU$15.6m and losses of AU$0.057 per share in 2025.

The analysts trimmed their valuations, with the average price target falling 14% to AU$1.73, with the ongoing losses seemingly weighing on sentiment, despite no real changes to the earnings forecasts. 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. Currently, the most bullish analyst values LARK Distilling at AU$3.00 per share, while the most bearish prices it at AU$1.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 7.2% by the end of 2025. This indicates a significant reduction from annual growth of 18% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.9% per year. It's pretty clear that LARK Distilling's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of LARK Distilling's future valuation.

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. At Simply Wall St, we have a full range of analyst estimates for LARK Distilling going out to 2027, and you can see them free on our platform here..

Even so, be aware that LARK Distilling is showing 3 warning signs in our investment analysis , you should know about...

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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.