US$4.33: That's What Analysts Think Nerdy, Inc. (NYSE:NRDY) Is Worth After Its Latest Results

Investors in Nerdy, Inc. (NYSE:NRDY) had a good week, as its shares rose 7.8% to close at US$2.48 following the release of its third-quarter results. It looks like the results were pretty good overall. While revenues of US$32m were in line with analyst predictions, statutory losses were much smaller than expected, with Nerdy losing US$0.21 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Nerdy

Taking into account the latest results, the consensus forecast from Nerdy's eight analysts is for revenues of US$208.5m in 2023, which would reflect a sizeable 28% improvement in sales compared to the last 12 months. Losses are forecast to balloon 664% to US$0.75 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$208.5m and losses of US$0.75 per share in 2023.

As a result, it's unexpected to see that the consensus price target fell 11% to US$4.33, with the analysts seemingly becoming more concerned about ongoing losses, despite making no major changes to their 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. There are some variant perceptions on Nerdy, with the most bullish analyst valuing it at US$6.00 and the most bearish at US$2.50 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Nerdy's past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Nerdy'shistorical trends, as the 22% annualised revenue growth to the end of 2023 is roughly in line with the 22% annual revenue growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 8.3% per year. So it's pretty clear that Nerdy is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Nerdy's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Nerdy analysts - going out to 2024, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 4 warning signs for Nerdy (1 is concerning!) that you need to be mindful 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.