Earnings Release: Here's Why Analysts Cut Their Riskified Ltd. (NYSE:RSKD) Price Target To US$9.43

Investors in Riskified Ltd. (NYSE:RSKD) had a good week, as its shares rose 2.9% to close at US$7.17 following the release of its annual results. Revenues of US$229m were in line with expectations, although statutory losses per share were US$2.34, some 17% smaller than was expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Riskified

Taking into account the latest results, the most recent consensus for Riskified from seven analysts is for revenues of US$255.4m in 2022 which, if met, would be a decent 11% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 32% to US$0.74. Before this earnings announcement, the analysts had been modelling revenues of US$253.7m and losses of US$0.82 per share in 2022. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.

The consensus price target fell 38% to US$9.43despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on valuations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Riskified, with the most bullish analyst valuing it at US$12.00 and the most bearish at US$7.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Riskified's revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2022 being well below the historical 35% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 14% per year. Factoring in the forecast slowdown in growth, it seems obvious that Riskified is also expected to grow slower than other industry participants.

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. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Riskified's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Riskified going out to 2024, and you can see them free on our platform here..

Plus, you should also learn about the 2 warning signs we've spotted with Riskified .

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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.