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Last week saw the newest quarterly earnings release from Sleep Number Corporation (NASDAQ:SNBR), an important milestone in the company's journey to build a stronger business. It was a pretty bad result overall; while revenues were in line with expectations at US$393m, statutory losses exploded to US$0.38 per share. 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.
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After the latest results, the consensus from Sleep Number's five analysts is for revenues of US$1.52b in 2025, which would reflect a small 5.6% decline in revenue compared to the last year of performance. Losses are predicted to fall substantially, shrinking 49% to US$0.48. Before this latest report, the consensus had been expecting revenues of US$1.57b and US$0.52 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.
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The consensus price target fell 17% to US$8.33, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Sleep Number at US$12.00 per share, while the most bearish prices it at US$6.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Sleep Number's past performance and to peers in the same industry. One more thing stood out to us about these estimates, and it's the idea that Sleep Number's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 7.4% to the end of 2025. This tops off a historical decline of 1.5% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 5.0% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Sleep Number to suffer worse than the wider industry.