a.k.a. Brands Holding Corp. (NYSE:AKA) Analysts Just Slashed This Year's Revenue Estimates By 11%

The analysts covering a.k.a. Brands Holding Corp. (NYSE:AKA) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the latest downgrade, the current consensus, from the nine analysts covering a.k.a. Brands Holding, is for revenues of US$630m in 2022, which would reflect a discernible 3.3% reduction in a.k.a. Brands Holding's sales over the past 12 months. Prior to this update, the analysts had been forecasting revenues of US$704m and earnings per share (EPS) of US$0.08 in 2022. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a earnings per share numbers as well.

View our latest analysis for a.k.a. Brands Holding

The consensus price target fell 39% to US$3.90, with the analysts clearly less optimistic about a.k.a. Brands Holding's valuation following this update. 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 a.k.a. Brands Holding at US$10.00 per share, while the most bearish prices it at US$2.20. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 6.4% by the end of 2022. This indicates a significant reduction from annual growth of 85% 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 13% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - a.k.a. Brands Holding is expected to lag the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for a.k.a. Brands Holding. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales 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 a.k.a. Brands Holding's 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 a.k.a. Brands Holding after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple a.k.a. Brands Holding analysts - going out to 2024, and you can see them free on our platform here.

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