Things Look Grim For HireRight Holdings Corporation (NYSE:HRT) After Today's Downgrade

The analysts covering HireRight Holdings Corporation (NYSE:HRT) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the latest downgrade, the ten analysts covering HireRight Holdings provided consensus estimates of US$751m revenue in 2023, which would reflect an uncomfortable 9.5% decline on its sales over the past 12 months. Statutory earnings per share are supposed to plunge 55% to US$0.66 in the same period. Before this latest update, the analysts had been forecasting revenues of US$870m and earnings per share (EPS) of US$1.86 in 2023. Indeed, we can see that the analysts are a lot more bearish about HireRight Holdings' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for HireRight Holdings

The consensus price target fell 24% to US$14.73, with the weaker earnings outlook clearly leading analyst valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic HireRight Holdings analyst has a price target of US$22.00 per share, while the most pessimistic values it at US$9.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 7.7% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 14% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.0% per year. It's pretty clear that HireRight Holdings' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for HireRight Holdings. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that HireRight Holdings' revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of HireRight Holdings.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple HireRight Holdings analysts - going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.