Yahoo Finance Rover Group, Inc. (NASDAQ:ROVR) Just Reported And Analysts Have Been Cutting Their Estimates
It's been a sad week for Rover Group, Inc. (NASDAQ:ROVR), who've watched their investment drop 12% to US$5.13 in the week since the company reported its annual result. It looks like the results were pretty good overall. While revenues of US$110m were in line with analyst predictions, statutory losses were much smaller than expected, with Rover Group losing US$0.72 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Check out our latest analysis for Rover Group
After the latest results, the seven analysts covering Rover Group are now predicting revenues of US$174.1m in 2022. If met, this would reflect a major 58% improvement in sales compared to the last 12 months. Per-share statutory losses are expected to explode, reaching US$0.056 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$200.8m and earnings per share (EPS) of US$0.034 in 2022. So we can see that the consensus has become notably more bearish on Rover Group's outlook following these results, with a substantial drop in next year's revenue estimates. Furthermore, they expect the business to be loss-making next year, compared to their previous calls for a profit.
The average price target fell 38% to US$8.33, implicitly signalling that lower earnings per share are a leading indicator for Rover Group's valuation. 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. Currently, the most bullish analyst values Rover Group at US$11.00 per share, while the most bearish prices it at US$6.00. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Rover Group's past performance and to peers in the same industry. It's clear from the latest estimates that Rover Group's rate of growth is expected to accelerate meaningfully, with the forecast 58% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 3.4% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Rover Group to grow faster than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Rover Group dropped from profits to a loss next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster 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 Rover Group's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Rover Group analysts - going out to 2024, 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 Rover Group that we have uncovered.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
