Analysts Have Been Trimming Their XpresSpa Group, Inc. (NASDAQ:XSPA) Price Target After Its Latest Report

There's been a notable change in appetite for XpresSpa Group, Inc. (NASDAQ:XSPA) shares in the week since its quarterly report, with the stock down 10% to US$1.48. Revenues came in 32% better than analyst models expected, at US$9.1m, although statutory losses ballooned 33% to US$0.04, which is much worse than what was forecast. Following the result, the analyst has updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analyst latest (statutory) post-earnings forecasts for next year.

See our latest analysis for XpresSpa Group

Taking into account the latest results, the current consensus from XpresSpa Group's sole analyst is for revenues of US$39.0m in 2021, which would reflect a sizeable 115% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 61% to US$0.13. Yet prior to the latest earnings, the analyst had been forecasting revenues of US$35.0m and losses of US$0.08 per share in 2021. Ergo, there's been a clear change in sentiment, with the analyst lifting this year's revenue estimates, while at the same time increasing their loss per share numbers to reflect the cost of achieving this growth.

It will come as no surprise that expanding losses caused the consensus price target to fall 97% to US$3.50with the analyst implicitly ranking ongoing losses as a greater concern than growing revenues.

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. For example, we noticed that XpresSpa Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 4x growth to the end of 2021 on an annualised basis. That is well above its historical decline of 5.9% a year 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 12% annually. So it looks like XpresSpa Group is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at XpresSpa Group. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analyst seemingly not reassured by the latest results, leading to a lower estimate of XpresSpa Group's future valuation.

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 XpresSpa Group going out as far as 2022, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 3 warning signs for XpresSpa Group (1 is a bit unpleasant) 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.
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