Yahoo Finance US$24.33: That's What Analysts Think The RealReal, Inc. Is Worth After Its Latest Results
Last week, you might have seen that The RealReal, Inc. (NASDAQ:REAL) released its yearly result to the market. The early response was not positive, with shares down 4.2% to US$14.95 in the past week. Revenues of US$318m arrived in line with expectations, although statutory losses per share were US$2.11, an impressive 86% smaller than what broker models predicted. Following the result, 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 analysts have changed their mind on RealReal after the latest results.
See our latest analysis for RealReal
After the latest results, the eleven analysts covering RealReal are now predicting revenues of US$416.4m in 2020. If met, this would reflect a huge 31% improvement in sales compared to the last 12 months. Statutory losses are forecast to balloon 46% to US$1.13 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$413.6m and losses of US$1.06 per share in 2020. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the earnings per share expectations following these results.
With the increase in forecast losses for next year, it's perhaps no surprise to see that the average analyst price target dipped 7.7% to US$24.33, with analysts signalling that growing losses would be a definite concern. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values RealReal at US$32.00 per share, while the most bearish prices it at US$19.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the RealReal's past performance and to peers in the same market. It's pretty clear that analysts expect RealReal's revenue growth will slow down substantially, with revenues next year expected to grow 31%, compared to a historical growth rate of 53% over the past year. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 16% next year. So it's pretty clear that, while RealReal's revenue growth is expected to slow, it's still expected to grow faster than the market itself.
The Bottom Line
The most obvious conclusion is that analysts made no changes to their forecasts for a loss next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that RealReal's revenues are expected to grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of RealReal's future valuation.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for RealReal going out to 2024, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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