Analysts Are Upgrading Pagaya Technologies Ltd. (NASDAQ:PGY) After Its Latest Results

Pagaya Technologies Ltd. (NASDAQ:PGY) came out with its annual results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues of US$749m beat expectations by a respectable 4.1%, although statutory losses per share increased. Pagaya Technologies lost US$0.69, which was 62% more than what the analysts had included in their models. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Pagaya Technologies after the latest results.

View our latest analysis for Pagaya Technologies

Taking into account the latest results, the current consensus from Pagaya Technologies' three analysts is for revenues of US$807.9m in 2023, which would reflect a modest 7.9% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 74% to US$0.12. Before this earnings announcement, the analysts had been modelling revenues of US$768.0m and losses of US$0.22 per share in 2023. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a very favorable reduction to loss per share in particular.

The consensus price target rose 34% to US$2.12, with the analysts encouraged by the higher revenue and lower forecast losses for next year. 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 Pagaya Technologies, with the most bullish analyst valuing it at US$3.00 and the most bearish at US$1.35 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. We would highlight that Pagaya Technologies' revenue growth is expected to slow, with the forecast 7.9% annualised growth rate until the end of 2023 being well below the historical 68% p.a. growth over the last three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 12% annually. Factoring in the forecast slowdown in growth, it seems obvious that Pagaya Technologies is also expected to grow slower than other industry participants.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Pagaya Technologies analysts - going out to 2025, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Pagaya Technologies 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.