Analysts Have Lowered Expectations For Sezzle Inc. (ASX:SZL) After Its Latest Results

Sezzle Inc. (ASX:SZL) shareholders are probably feeling a little disappointed, since its shares fell 8.7% to AU$1.62 in the week after its latest full-year results. It was a pretty bad result overall; while revenues were in line with expectations at US$115m, statutory losses exploded to US$0.38 per share. The 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 the analysts are expecting for next year.

See our latest analysis for Sezzle

Taking into account the latest results, the current consensus from Sezzle's three analysts is for revenues of US$158.5m in 2022, which would reflect a sizeable 38% increase on its sales over the past 12 months. Losses are expected to hold steady at around US$0.37. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$177.4m and losses of US$0.30 per share in 2022. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The consensus price target fell 23% to AU$4.08, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Sezzle analyst has a price target of AU$6.24 per share, while the most pessimistic values it at AU$2.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. 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. It's pretty clear that there is an expectation that Sezzle's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 38% growth on an annualised basis. This is compared to a historical growth rate of 90% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 19% annually. So it's pretty clear that, while Sezzle's 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 the analysts increased their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Sezzle going out to 2024, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 5 warning signs with Sezzle (at least 2 which are significant) , and understanding these should be part of your investment process.

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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.