- United States
What Does The Future Hold For BRC Inc. (NYSE:BRCC)? These Analysts Have Been Cutting Their Estimates
One thing we could say about the analysts on BRC Inc. (NYSE:BRCC) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the current consensus from BRC's eight analysts is for revenues of US$433m in 2023 which - if met - would reflect a huge 44% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 96% to US$0.06. However, before this estimates update, the consensus had been expecting revenues of US$503m and US$0.027 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
Check out our latest analysis for BRC
The consensus price target fell 14% to US$10.36, implicitly signalling that lower earnings per share are a leading indicator for BRC's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic BRC analyst has a price target of US$19.00 per share, while the most pessimistic values it at US$5.00. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily on 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 clear from the latest estimates that BRC's rate of growth is expected to accelerate meaningfully, with the forecast 44% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 33% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.6% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect BRC to grow faster than the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at BRC. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of BRC going forwards.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with BRC's business, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 1 other flag we've identified.
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Find out whether BRC is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis
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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.
BRC Inc., through its subsidiaries, purchases, roasts, and sells coffee, coffee accessories, and branded apparel in the United States.
Good value with reasonable growth potential.