Earnings Release: Here's Why Analysts Cut Their Noodles & Company (NASDAQ:NDLS) Price Target To US$1.75

The analysts might have been a bit too bullish on Noodles & Company (NASDAQ:NDLS), given that the company fell short of expectations when it released its second-quarter results last week. Revenues missed expectations somewhat, coming in at US$126m, but statutory earnings fell catastrophically short, with a loss of US$0.38 some 485% larger than what the analysts had predicted. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Taking into account the latest results, Noodles' dual analysts currently expect revenues in 2025 to be US$494.1m, approximately in line with the last 12 months. Losses are expected to be contained, narrowing 14% from last year to US$0.84. Before this latest report, the consensus had been expecting revenues of US$489.4m and US$0.40 per share in losses. So it's pretty clear the analysts have mixed opinions on Noodles even after this update; although they reconfirmed their revenue numbers, it came at the cost of a regrettable increase in per-share losses.

View our latest analysis for Noodles

The consensus price target fell 13% to US$1.75per share, with the analysts clearly concerned by ballooning losses.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Noodles' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Noodles' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 0.02% growth on an annualised basis. This is compared to a historical growth rate of 3.7% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Noodles.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Noodles. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Noodles' revenue is expected to perform worse than the wider 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Noodles going out as far as 2026, and you can see them free on our platform here.

Even so, be aware that Noodles is showing 5 warning signs in our investment analysis , and 3 of those are a bit concerning...

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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.