Earnings Release: Here's Why Analysts Cut Their a.k.a. Brands Holding Corp. (NYSE:AKA) Price Target To US$23.75

Shareholders might have noticed that a.k.a. Brands Holding Corp. (NYSE:AKA) filed its yearly result this time last week. The early response was not positive, with shares down 7.2% to US$13.24 in the past week. It was a pretty bad result overall; while revenues were in line with expectations at US$575m, statutory losses exploded to US$2.46 per share. 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 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 the latest results, a.k.a. Brands Holding's five analysts are now forecasting revenues of US$606.3m in 2025. This would be a modest 5.5% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 58% to US$1.03. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$599.7m and losses of US$0.40 per share in 2025. So it's pretty clear the analysts have mixed opinions on a.k.a. Brands Holding even after this update; although they reconfirmed their revenue numbers, it came at the cost of a massive increase in per-share losses.

The consensus price target fell 6.9% to US$23.75per share, with the analysts clearly concerned by ballooning losses. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic a.k.a. Brands Holding analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$17.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await a.k.a. Brands Holding shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that a.k.a. Brands Holding's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 5.5% growth on an annualised basis. This is compared to a historical growth rate of 16% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.0% annually. Factoring in the forecast slowdown in growth, it looks like a.k.a. Brands Holding 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 increased their loss per share estimates for next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for a.k.a. Brands Holding that you should be aware 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.