It's been a sad week for Opendoor Technologies Inc. (NASDAQ:OPEN), who've watched their investment drop 15% to US$3.00 in the week since the company reported its annual result. Revenues of US$6.9b were in line with expectations, although statutory losses per share were US$0.42, some 17% smaller than was expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the eleven analysts covering Opendoor Technologies provided consensus estimates of US$5.69b revenue in 2024, which would reflect a chunky 18% decline over the past 12 months. Losses are forecast to balloon 77% to US$0.72 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$5.99b and losses of US$0.74 per share in 2024. 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.
There was a decent 7.9% increase in the price target to US$3.55, with the analysts clearly signalling that the expected reduction in losses is a positive, despite a weaker revenue outlook. 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. The most optimistic Opendoor Technologies analyst has a price target of US$4.50 per share, while the most pessimistic values it at US$2.75. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 18% by the end of 2024. This indicates a significant reduction from annual growth of 32% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Opendoor Technologies is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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 Opendoor Technologies going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Opendoor Technologies , and understanding these should be part of your investment process.
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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.