Earnings Update: Sleep Cycle AB (publ) (STO:SLEEP) Just Reported And Analysts Are Trimming Their Forecasts

As you might know, Sleep Cycle AB (publ) (STO:SLEEP) last week released its latest first-quarter, and things did not turn out so great for shareholders. Results look to have been somewhat negative - revenue fell 4.5% short of analyst estimates at kr65m, and statutory earnings of kr0.68 per share missed forecasts by 2.9%. 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.

We've discovered 2 warning signs about Sleep Cycle. View them for free.

Taking into account the latest results, the consensus forecast from Sleep Cycle's three analysts is for revenues of kr270.7m in 2025. This reflects a modest 2.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to reduce 8.2% to kr2.94 in the same period. In the lead-up to this report, the analysts had been modelling revenues of kr287.9m and earnings per share (EPS) of kr3.15 in 2025. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

Check out our latest analysis for Sleep Cycle

The analysts made no major changes to their price target of kr41.67, suggesting the downgrades are not expected to have a long-term impact on Sleep Cycle's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Sleep Cycle at kr55.00 per share, while the most bearish prices it at kr26.00. 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.

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. It's pretty clear that there is an expectation that Sleep Cycle's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 3.9% growth on an annualised basis. This is compared to a historical growth rate of 11% 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 15% per year. Factoring in the forecast slowdown in growth, it seems obvious that Sleep Cycle is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Sleep Cycle. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 forecasts for Sleep Cycle going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Sleep Cycle that you need to take into consideration.

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.