Blue Apron Holdings, Inc. (NYSE:APRN) Analysts Just Slashed Next Year's Revenue Estimates By 13%

Market forces rained on the parade of Blue Apron Holdings, Inc. (NYSE:APRN) 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 downgrade, the current consensus from Blue Apron Holdings' four analysts is for revenues of US$501m in 2023 which - if met - would reflect a notable 9.2% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 59% to US$1.17. Yet before this consensus update, the analysts had been forecasting revenues of US$578m and losses of US$0.91 per share in 2023. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

Our analysis indicates that APRN is potentially undervalued!

The consensus price target fell 17% to US$7.25, implicitly signalling that lower earnings per share are a leading indicator for Blue Apron Holdings' 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. There are some variant perceptions on Blue Apron Holdings, with the most bullish analyst valuing it at US$10.00 and the most bearish at US$4.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Blue Apron Holdings is forecast to grow faster in the future than it has in the past, with revenues expected to display 7.3% annualised growth until the end of 2023. If achieved, this would be a much better result than the 15% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 4.1% annually. So it looks like Blue Apron Holdings is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better 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 Blue Apron Holdings going forwards.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Blue Apron Holdings' financials, such as dilutive stock issuance over the past year. Learn more, and discover the 4 other warning signs we've identified, for 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.