Frontdoor, Inc. (NASDAQ:FTDR) Just Reported Earnings, And Analysts Cut Their Target Price

One of the biggest stories of last week was how Frontdoor, Inc. (NASDAQ:FTDR) shares plunged 20% in the week since its latest yearly results, closing yesterday at US$45.48. Frontdoor reported US$1.8b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$3.01 beat expectations, being 2.8% higher than what the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Frontdoor after the latest results.

View our latest analysis for Frontdoor

Following the latest results, Frontdoor's six analysts are now forecasting revenues of US$2.02b in 2025. This would be a decent 9.8% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to reduce 8.9% to US$2.86 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.94b and earnings per share (EPS) of US$3.13 in 2025. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a decent to revenue, the consensus also made a minor downgrade to its earnings per share forecasts.

The consensus price target fell 5.6% to US$55.25, suggesting that the analysts are primarily focused on earnings as the driver of value for this business. 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. There are some variant perceptions on Frontdoor, with the most bullish analyst valuing it at US$67.00 and the most bearish at US$40.00 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.

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. The analysts are definitely expecting Frontdoor's growth to accelerate, with the forecast 9.8% annualised growth to the end of 2025 ranking favourably alongside historical growth of 5.9% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 10% annually. Frontdoor is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Frontdoor. They also upgraded their revenue forecasts, although the latest estimates suggest that Frontdoor will grow in line with the overall industry. 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 Frontdoor going out to 2027, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Frontdoor you should be aware 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.