Funko, Inc. Just Reported A Surprise Profit And Analysts Updated Their Estimates

Investors in Funko, Inc. (NASDAQ:FNKO) had a good week, as its shares rose 9.9% to close at US$9.62 following the release of its second-quarter results. It was overall a positive result, with revenues beating expectations by 7.2% to hit US$248m. Funko also reported a statutory profit of US$0.10, which was a nice improvement from the loss that the analysts were predicting. 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 Funko

Following last week's earnings report, Funko's four analysts are forecasting 2024 revenues to be US$1.07b, approximately in line with the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 43% to US$0.47. Before this earnings announcement, the analysts had been modelling revenues of US$1.07b and losses of US$0.40 per share in 2024. While this year's revenue estimates held steady, there was also a notable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

Despite expectations of heavier losses next year,the analysts have lifted their price target 9.5% to US$10.13, perhaps implying these losses are not expected to be recurring over the long term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Funko analyst has a price target of US$13.00 per share, while the most pessimistic values it at US$6.50. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Funko's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Funko's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.6% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 2.8% annually. Factoring in the forecast slowdown in growth, it seems obvious that Funko is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Funko's revenue is expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 estimates - from multiple Funko analysts - going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Funko (1 shouldn't be ignored!) that you need to be mindful of.

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.