Olaplex Holdings, Inc. (NASDAQ:OLPX) Analysts Just Slashed This Year's Revenue Estimates By 19%

Today is shaping up negative for Olaplex Holdings, Inc. (NASDAQ:OLPX) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the latest downgrade, the twelve analysts covering Olaplex Holdings provided consensus estimates of US$593m revenue in 2023, which would reflect a considerable 16% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$733m in 2023. It looks like forecasts have become a fair bit less optimistic on Olaplex Holdings, given the measurable cut to revenue estimates.

See our latest analysis for Olaplex Holdings

Notably, the analysts have cut their price target 9.4% to US$6.79, suggesting concerns around Olaplex Holdings' 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 Olaplex Holdings analyst has a price target of US$15.00 per share, while the most pessimistic values it at US$4.00. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Olaplex Holdings' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 16% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 43% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 9.2% per year. It's pretty clear that Olaplex Holdings' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Olaplex Holdings this year. They also expect company revenue to perform worse 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. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Olaplex Holdings after today.

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 Olaplex Holdings' business, like a weak balance sheet. Learn more, and discover the 1 other flag we've identified, for free on our platform here.

We also provide an overview of the Olaplex Holdings Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.