Analysts Have Been Trimming Their a.k.a. Brands Holding Corp. (NYSE:AKA) Price Target After Its Latest Report

Shareholders of a.k.a. Brands Holding Corp. (NYSE:AKA) will be pleased this week, given that the stock price is up 14% to US$0.37 following its latest first-quarter results. It was a pretty bad result overall; while revenues were in line with expectations at US$120m, statutory losses exploded to US$0.07 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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

Following last week's earnings report, a.k.a. Brands Holding's eight analysts are forecasting 2023 revenues to be US$584.4m, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 97% to US$0.043. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$583.6m and losses of US$0.043 per share in 2023.

The analysts trimmed their valuations, with the average price target falling 19% to US$1.58, with the ongoing losses seemingly weighing on sentiment, despite no real changes to the earnings forecasts. 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$3.00 per share, while the most bearish prices it at US$0.50. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. From these estimates it looks as though the analysts expect the years of declining sales to come to an end, given the flat revenue forecast out to 2023. That would be a definite improvement, given that the past year have seen sales shrink 9.0% annually. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 6.3% annually. So it's pretty clear that, although revenues are improving, a.k.a. Brands Holding is still expected to grow slower than the industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider 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.

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

And what about risks? Every company has them, and we've spotted 2 warning signs for a.k.a. Brands Holding (of which 1 is a bit concerning!) you should know about.

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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.