US$4.55: That's What Analysts Think The Honest Company, Inc. (NASDAQ:HNST) Is Worth After Its Latest Results

Shareholders of The Honest Company, Inc. (NASDAQ:HNST) will be pleased this week, given that the stock price is up 11% to US$3.17 following its latest quarterly results. The results were positive, with revenue coming in at US$86m, beating analyst expectations by 2.4%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Honest Company after the latest results.

Check out our latest analysis for Honest Company

Taking into account the latest results, the most recent consensus for Honest Company from six analysts is for revenues of US$359.6m in 2024. If met, it would imply a modest 3.6% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 54% to US$0.10. Before this latest report, the consensus had been expecting revenues of US$357.0m and US$0.17 per share in losses. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading their numbers and making a very promising decrease in losses per share in particular.

The consensus price target fell 8.1% to US$4.55despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on valuations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Honest Company analyst has a price target of US$6.00 per share, while the most pessimistic values it at US$3.00. 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.

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. The analysts are definitely expecting Honest Company's growth to accelerate, with the forecast 4.8% annualised growth to the end of 2024 ranking favourably alongside historical growth of 3.9% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 6.9% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Honest Company is expected to grow slower than the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Honest Company analysts - going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 4 warning signs we've spotted with Honest Company .

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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.