The Honest Company, Inc. (NASDAQ:HNST) Analysts Are Pretty Bullish On The Stock After Recent Results

The Honest Company, Inc. (NASDAQ:HNST) just released its latest quarterly results and things are looking bullish. It looks like a positive result overall, with revenues of US$93m beating forecasts by 6.8%. Statutory losses of US$0.04 per share were 6.8% smaller than the analysts expected, likely helped along by the higher revenues. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Honest Company

Taking into account the latest results, the consensus forecast from Honest Company's seven analysts is for revenues of US$368.5m in 2024. This reflects an okay 3.6% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 26% to US$0.092. Before this latest report, the consensus had been expecting revenues of US$360.2m and US$0.13 per share in losses. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a very favorable reduction to loss per share in particular.

The consensus price target rose 14% to US$5.21, with the analysts encouraged by the higher revenue and lower forecast losses for next year. 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. The most optimistic Honest Company analyst has a price target of US$6.50 per share, while the most pessimistic values it at US$4.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Honest Company's growth to accelerate, with the forecast 7.3% annualised growth to the end of 2024 ranking favourably alongside historical growth of 4.6% per annum over the past three years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 6.3% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Honest Company is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. They also upgraded their revenue forecasts, although the latest estimates suggest that Honest Company will grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Honest Company. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Honest Company going out to 2026, and you can see them free on our platform here..

Even so, be aware that Honest Company is showing 2 warning signs in our investment analysis , you should know about...

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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.