Redwire Corporation (NYSE:RDW) Released Earnings Last Week And Analysts Lifted Their Price Target To US$6.40

Shareholders of Redwire Corporation (NYSE:RDW) will be pleased this week, given that the stock price is up 11% to US$4.67 following its latest first-quarter results. Revenues came in 33% better than analyst models expected, at US$88m, although statutory losses ballooned 42% to US$0.17, which is much worse than what was forecast. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Redwire

Following the latest results, Redwire's five analysts are now forecasting revenues of US$304.3m in 2024. This would be a meaningful 11% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 43% to US$0.40. Before this earnings announcement, the analysts had been modelling revenues of US$301.5m and losses of US$0.37 per share in 2024. So it's pretty clear consensus is mixed on Redwire after the new consensus numbers; while the analysts held their revenue numbers steady, they also administered a modest increase to per-share loss expectations.

Although the analysts are now forecasting higher losses, the average price target rose 6.7% to 6, which could indicate that these losses are expected to be "one-off", or are not anticipated to have a longer-term impact on 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 Redwire at US$9.00 per share, while the most bearish prices it at US$5.00. 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.

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 would highlight that Redwire's revenue growth is expected to slow, with the forecast 15% annualised growth rate until the end of 2024 being well below the historical 36% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 2.4% per year. Even after the forecast slowdown in growth, it seems obvious that Redwire is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Redwire. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Redwire going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Redwire that you should be aware of.

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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.