Earnings Release: Here's Why Analysts Cut Their Poshmark, Inc. (NASDAQ:POSH) Price Target To US$18.46

It's been a pretty great week for Poshmark, Inc. (NASDAQ:POSH) shareholders, with its shares surging 15% to US$14.18 in the week since its latest full-year results. Revenues came in at US$326m, in line with forecasts and the company reported a statutory loss of US$1.35 per share, roughly in line with expectations. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Poshmark

Taking into account the latest results, the consensus forecast from Poshmark's 14 analysts is for revenues of US$378.5m in 2022, which would reflect a solid 16% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 63% to US$0.47. Before this earnings announcement, the analysts had been modelling revenues of US$378.8m and losses of US$0.47 per share in 2022.

The analysts trimmed their valuations, with the average price target falling 23% to US$18.46, with the ongoing losses seemingly weighing on sentiment, despite no real changes to the earnings forecasts. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Poshmark, with the most bullish analyst valuing it at US$33.00 and the most bearish at US$10.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Poshmark's revenue growth is expected to slow, with the forecast 16% annualised growth rate until the end of 2022 being well below the historical 23% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 14% annually. Factoring in the forecast slowdown in growth, it looks like Poshmark is forecast to grow at about the same rate as 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. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Poshmark going out to 2024, and you can see them free on our platform here..

Before you take the next step you should know about the 2 warning signs for Poshmark that we have uncovered.

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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.