Analysts Just Made A Major Revision To Their Latham Group, Inc. (NASDAQ:SWIM) Revenue Forecasts

Market forces rained on the parade of Latham Group, Inc. (NASDAQ:SWIM) shareholders today, when the analysts downgraded their forecasts for next year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the latest downgrade, the current consensus, from the seven analysts covering Latham Group, is for revenues of US$634m in 2023, which would reflect a considerable 13% reduction in Latham Group's sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$732m in 2023. It looks like forecasts have become a fair bit less optimistic on Latham Group, given the measurable cut to revenue estimates.

See our latest analysis for Latham Group

Notably, the analysts have cut their price target 17% to US$6.69, suggesting concerns around Latham Group's valuation. 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. Currently, the most bullish analyst values Latham Group at US$10.00 per share, while the most bearish prices it at US$3.50. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 10% by the end of 2023. This indicates a significant reduction from annual growth of 28% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Latham Group is expected to lag the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Latham Group next year. They're also anticipating slower revenue growth than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Latham Group going forwards.

Want to learn more? At least one of Latham Group's seven analysts has provided estimates out to 2024, which can be seen for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.