Analysts Have Been Trimming Their WK Kellogg Co (NYSE:KLG) Price Target After Its Latest Report

Shareholders might have noticed that WK Kellogg Co (NYSE:KLG) filed its second-quarter result this time last week. The early response was not positive, with shares down 3.4% to US$16.77 in the past week. It was a credible result overall, with revenues of US$672m and statutory earnings per share of US$1.28 both in line with analyst estimates, showing that WK Kellogg Co is executing in line with expectations. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for WK Kellogg Co

Taking into account the latest results, WK Kellogg Co's eight analysts currently expect revenues in 2024 to be US$2.71b, approximately in line with the last 12 months. Statutory earnings per share are expected to fall 12% to US$1.24 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.71b and earnings per share (EPS) of US$1.35 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target fell 5.7% to US$18.05, with the analysts clearly linking lower forecast earnings to the performance of the stock price. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values WK Kellogg Co at US$27.00 per share, while the most bearish prices it at US$14.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would also point out that the forecast 1.1% annualised revenue decline to the end of 2024 is better than the historical trend, which saw revenues shrink 2.8% annually over the past year By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 3.1% per year. So while a broad number of companies are forecast to grow, unfortunately WK Kellogg Co is expected to see its revenue affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that WK Kellogg Co's revenue is expected to perform worse 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 WK Kellogg Co's future valuation.

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 WK Kellogg Co going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for WK Kellogg Co that 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.