The Porch Group, Inc. (NASDAQ:PRCH) Analysts Have Been Trimming Their Sales Forecasts

Today is shaping up negative for Porch Group, Inc. (NASDAQ:PRCH) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. Surprisingly the share price has been buoyant, rising 57% to US$3.18 in the past 7 days. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the latest downgrade, Porch Group's six analysts currently expect revenues in 2025 to be US$450m, approximately in line with the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$511m in 2025. The consensus view seems to have become more pessimistic on Porch Group, noting the measurable cut to revenue estimates in this update.

View our latest analysis for Porch Group

Additionally, the consensus price target for Porch Group increased 11% to US$4.25, showing a clear increase in optimism from the analysts involved.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 0.4% annualised revenue decline to the end of 2025. That is a notable change from historical growth of 40% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 12% annually for the foreseeable future. It's pretty clear that Porch Group's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Porch Group next year. They also expect company revenue to perform worse than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Porch Group going forwards.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Porch Group, including dilutive stock issuance over the past year. Learn more, and discover the 2 other concerns we've identified, for 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.