Need To Know: The Consensus Just Cut Its Offerpad Solutions Inc. (NYSE:OPAD) Estimates For 2023

One thing we could say about the analysts on Offerpad Solutions Inc. (NYSE:OPAD) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the consensus from eight analysts covering Offerpad Solutions is for revenues of US$1.8b in 2023, implying a sizeable 44% decline in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 27% to US$0.46. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$2.0b and losses of US$0.46 per share in 2023. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also making no real change to the loss per share numbers.

Check out our latest analysis for Offerpad Solutions

There was no real change to the consensus price target of US$0.76, suggesting that the revisions to revenue estimates are not expected to have a long-term impact on Offerpad Solutions' 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. Currently, the most bullish analyst values Offerpad Solutions at US$1.75 per share, while the most bearish prices it at US$0.35. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. As a result it might not be possible to derive much meaning from 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. We would highlight that sales are expected to reverse, with a forecast 54% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 0.9% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.4% per year. It's pretty clear that Offerpad Solutions' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Offerpad Solutions' revenues are expected to grow slower than the wider market. 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 Offerpad Solutions 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 Offerpad Solutions' business, like major dilution from new stock issuance in the past year. Learn more, and discover the 1 other concern we've identified, for free on our platform here.

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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.