Investors in Olaplex Holdings, Inc. (NASDAQ:OLPX) had a good week, as its shares rose 2.9% to close at US$1.97 following the release of its quarterly results. Statutory earnings per share fell badly short of expectations, coming in at US$0.01, some 24% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$104m. Following the result, the 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the ten analysts covering Olaplex Holdings are now predicting revenues of US$446.9m in 2024. If met, this would reflect a reasonable 2.0% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to shrink 9.7% to US$0.066 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$451.5m and earnings per share (EPS) of US$0.071 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 8.7% to US$2.56, suggesting the revised estimates are not indicative of a weaker long-term future for the business. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Olaplex Holdings at US$5.00 per share, while the most bearish prices it at US$2.00. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Olaplex Holdings' past performance and to peers in the same industry. One thing stands out from these estimates, which is that Olaplex Holdings is forecast to grow faster in the future than it has in the past, with revenues expected to display 4.0% annualised growth until the end of 2024. If achieved, this would be a much better result than the 8.2% annual decline over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 6.5% per year. Although Olaplex Holdings' revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Olaplex Holdings' revenue is expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Olaplex Holdings going out to 2026, and you can see them free on our platform here..
Even so, be aware that Olaplex Holdings is showing 2 warning signs in our investment analysis , you should know about...
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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.