The Xcel Brands, Inc. (NASDAQ:XELB) Analysts Have Been Trimming Their Sales Forecasts

The analysts covering Xcel Brands, Inc. (NASDAQ:XELB) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. At US$0.70, shares are up 9.0% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following this downgrade, Xcel Brands' twin analysts are forecasting 2024 revenues to be US$9.9m, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 43% to US$0.43 per share. However, before this estimates update, the consensus had been expecting revenues of US$12m and US$0.43 per share in losses. 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.

View our latest analysis for Xcel Brands

the analysts have cut their price target 9.1% to US$2.50 per share, signalling that the declining revenue and ongoing losses are contributing to the lower valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Xcel Brands' past performance and to peers in the same industry. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2024 compared to the historical decline of 17% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.8% per year. So while a broad number of companies are forecast to grow, unfortunately Xcel Brands is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Xcel Brands' revenues are expected to grow slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Xcel Brands' future valuation. 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 Xcel Brands after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Xcel Brands going out as far as 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.