US$3.38: That's What Analysts Think WeWork Inc. (NYSE:WE) Is Worth After Its Latest Results

WeWork Inc. (NYSE:WE) last week reported its latest first-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues came in at US$849m, in line with forecasts and the company reported a statutory loss of US$0.34 per share, roughly in line with expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for WeWork

Following the latest results, WeWork's six analysts are now forecasting revenues of US$3.66b in 2023. This would be a solid 9.9% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 26% to US$0.65. Before this latest report, the consensus had been expecting revenues of US$3.67b and US$0.94 per share in losses. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading revenues and making a very promising decrease in losses per share in particular.

The consensus price target fell 22% to US$3.38despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on valuations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values WeWork at US$7.00 per share, while the most bearish prices 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that WeWork is forecast to grow faster in the future than it has in the past, with revenues expected to display 13% annualised growth until the end of 2023. If achieved, this would be a much better result than the 6.0% annual decline over the past three years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 9.1% annually. Not only are WeWork's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of WeWork's future valuation.

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 estimates - from multiple WeWork analysts - going out to 2025, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 5 warning signs for WeWork (3 are concerning!) that you need to be mindful 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.