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There's been a major selloff in Vestis Corporation (NYSE:VSTS) shares in the week since it released its quarterly report, with the stock down 30% to US$6.27. Revenues fell 3.7% short of expectations, at US$665m. Earnings correspondingly dipped, with Vestis reporting a statutory loss of US$0.21 per share, whereas the analysts had previously modelled a profit in this period. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
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Following last week's earnings report, Vestis' eight analysts are forecasting 2025 revenues to be US$2.71b, approximately in line with the last 12 months. Statutory losses are expected to reduce, shrinking 12% from last year to US$0.21. Before this earnings report, the analysts had been forecasting revenues of US$2.82b and earnings per share (EPS) of US$0.35 in 2025. There looks to have been a significant drop in sentiment regarding Vestis' prospects after these latest results, with a minor downgrade to revenues and the analysts now forecasting a loss instead of a profit.
View our latest analysis for Vestis
The average price target fell 49% to US$7.41, implicitly signalling that lower earnings per share are a leading indicator for Vestis' 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. There are some variant perceptions on Vestis, with the most bullish analyst valuing it at US$13.40 and the most bearish at US$5.00 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the 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. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2025 compared to the historical decline of 4.1% per annum over the past year. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 6.7% annually. So while a broad number of companies are forecast to grow, unfortunately Vestis is expected to see its revenue affected worse than other companies in the industry.