Redfin Corporation (NASDAQ:RDFN) Just Reported And Analysts Have Been Cutting Their Estimates
It's been a mediocre week for Redfin Corporation (NASDAQ:RDFN) shareholders, with the stock dropping 15% to US$6.67 in the week since its latest annual results. The statutory results were mixed overall, with revenues of US$1.0b in line with analyst forecasts, but losses of US$1.36 per share, some 3.6% larger than the analysts were predicting. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Redfin
Following last week's earnings report, Redfin's 16 analysts are forecasting 2025 revenues to be US$1.06b, approximately in line with the last 12 months. Losses are supposed to decline, shrinking 16% from last year to US$1.10. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$1.13b and losses of US$0.98 per share in 2025. So it's pretty clear the analysts have mixed opinions on Redfin after this update; revenues were downgraded and per-share losses expected to increase.
The average price target fell 9.5% to US$7.84, implicitly signalling that lower earnings per share are a leading indicator for Redfin'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 Redfin at US$12.00 per share, while the most bearish prices it at US$4.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
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 can infer from the latest estimates that forecasts expect a continuation of Redfin'shistorical trends, as the 1.8% annualised revenue growth to the end of 2025 is roughly in line with the 1.9% annual growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 10% annually. So although Redfin is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.
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