Sonos, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

As you might know, Sonos, Inc. (NASDAQ:SONO) recently reported its quarterly numbers. It looks like a credible result overall - although revenues of US$397m were what the analysts expected, Sonos surprised by delivering a (statutory) profit of US$0.03 per share, an impressive 200% above what was forecast. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Sonos

Following the latest results, Sonos' six analysts are now forecasting revenues of US$1.65b in 2025. This would be a modest 5.1% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Sonos forecast to report a statutory profit of US$0.15 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.79b and earnings per share (EPS) of US$0.36 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.

It'll come as no surprise then, to learn that the analysts have cut their price target 9.6% to US$20.80. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Sonos, with the most bullish analyst valuing it at US$25.00 and the most bearish at US$16.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Sonos' revenue growth is expected to slow, with the forecast 4.1% annualised growth rate until the end of 2025 being well below the historical 5.6% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.8% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Sonos.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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. 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.

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 Sonos going out to 2026, and you can see them free on our platform here.

You can also see our analysis of Sonos' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.