Offerpad Solutions Inc. (NYSE:OPAD) Just Reported And Analysts Have Been Cutting Their Estimates

Offerpad Solutions Inc. (NYSE:OPAD) just released its latest first-quarter results and things are looking bullish. The results overall were pretty good, with revenues of US$610m exceeding expectations and statutory losses coming in at justUS$0.17 per share, some 27% below what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Offerpad Solutions

Taking into account the latest results, the current consensus, from the eight analysts covering Offerpad Solutions, is for revenues of US$1.79b in 2023, which would reflect a sizeable 44% reduction in Offerpad Solutions' sales over the past 12 months. Losses are predicted to fall substantially, shrinking 27% to US$0.46. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$2.00b and losses of US$0.46 per share in 2023. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to next year's revenue estimates, while at the same time holding losses per share steady.

The consensus price target was broadly unchanged at US$0.76, implying that the business is performing roughly in line with expectations, despite a downwards adjustment to forecast sales next year. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. 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 different views on what kind of performance this business can generate. 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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 54% by the end of 2023. This indicates a significant reduction from annual growth of 0.9% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 8.4% annually for the foreseeable future. It's pretty clear that Offerpad Solutions' revenues are expected to perform substantially worse 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 negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$0.76, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Offerpad Solutions going out to 2025, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Offerpad Solutions (2 can't be ignored) you should be aware of.

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.