Solo Brands, Inc. (NYSE:DTC) Released Earnings Last Week And Analysts Lifted Their Price Target To US$10.17

It's been a sad week for Solo Brands, Inc. (NYSE:DTC), who've watched their investment drop 11% to US$7.13 in the week since the company reported its quarterly result. The results were positive, with revenue coming in at US$88m, beating analyst expectations by 2.5%. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Solo Brands

Taking into account the latest results, the most recent consensus for Solo Brands from six analysts is for revenues of US$538.6m in 2023 which, if met, would be an okay 2.9% increase on its sales over the past 12 months. Earnings are expected to improve, with Solo Brands forecast to report a statutory profit of US$0.42 per share. Before this earnings report, the analysts had been forecasting revenues of US$539.5m and earnings per share (EPS) of US$0.31 in 2023. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the considerable lift to earnings per share expectations following these results.

The consensus price target rose 7.0% to US$10.17, suggesting that higher earnings estimates flow through to the stock's valuation as well. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Solo Brands, with the most bullish analyst valuing it at US$12.00 and the most bearish at US$9.00 per share. This is a very narrow spread of estimates, implying either that Solo Brands is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. We would highlight that Solo Brands' revenue growth is expected to slow, with the forecast 3.8% annualised growth rate until the end of 2023 being well below the historical 26% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.3% annually. So it's pretty clear that, while Solo Brands' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Solo Brands following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 Solo Brands going out to 2025, 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 1 warning sign for Solo Brands that you need to be mindful of.

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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.