Nerdy, Inc. (NYSE:NRDY) Just Reported And Analysts Have Been Cutting Their Estimates

It's been a mediocre week for Nerdy, Inc. (NYSE:NRDY) shareholders, with the stock dropping 13% to US$0.86 in the week since its latest third-quarter results. Results look to have been somewhat negative - revenue fell 4.5% short of analyst estimates at US$37m, although statutory losses were somewhat better. The per-share loss was US$0.10, 33% smaller than the analysts were expecting prior to the result. Following the result, the analysts have 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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Following the latest results, Nerdy's five analysts are now forecasting revenues of US$187.6m in 2026. This would be a credible 5.5% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 32% to US$0.22. Before this earnings announcement, the analysts had been modelling revenues of US$213.5m and losses of US$0.19 per share in 2026. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

See our latest analysis for Nerdy

There was no major change to the consensus price target of US$1.96, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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. Currently, the most bullish analyst values Nerdy at US$3.00 per share, while the most bearish prices it at US$1.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on 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. It's pretty clear that there is an expectation that Nerdy's revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 4.4% growth on an annualised basis. This is compared to a historical growth rate of 10% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.9% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Nerdy.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 Nerdy going out to 2027, and you can see them free on our platform here.

Even so, be aware that Nerdy is showing 3 warning signs in our investment analysis , and 1 of those shouldn't be ignored...

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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.