Opendoor Technologies Inc. (NASDAQ:OPEN) Just Reported Third-Quarter Earnings: Have Analysts Changed Their Mind On The Stock?

A week ago, Opendoor Technologies Inc. (NASDAQ:OPEN) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Results overall were solid, with revenues arriving 8.3% better than analyst forecasts at US$1.4b. Higher revenues also resulted in substantially lower statutory losses which, at US$0.11 per share, were 8.3% smaller than the analysts expected. 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 Opendoor Technologies after the latest results.

Check out our latest analysis for Opendoor Technologies

After the latest results, the twelve analysts covering Opendoor Technologies are now predicting revenues of US$6.97b in 2025. If met, this would reflect a sizeable 41% improvement in revenue compared to the last 12 months. The loss per share is expected to ameliorate slightly, reducing to US$0.50. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$7.34b and losses of US$0.54 per share in 2025. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers fell somewhat.

There was no major change to the US$1.96average price target, suggesting that the adjustments to revenue and earnings are not expected to have a long-term impact on the business. 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 Opendoor Technologies analyst has a price target of US$3.25 per share, while the most pessimistic values it at US$1.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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 Opendoor Technologies' growth to accelerate, with the forecast 32% annualised growth to the end of 2025 ranking favourably alongside historical growth of 14% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Opendoor Technologies is expected to grow much faster than its 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 downgraded Opendoor Technologies' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Even so, long term profitability is more important for the value creation process. The consensus price target held steady at US$1.96, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Opendoor Technologies. Long-term earnings power is much more important than next year's profits. We have forecasts for Opendoor Technologies going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Opendoor Technologies has 5 warning signs we think 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.