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Vera Bradley, Inc. (NASDAQ:VRA) Analysts Are More Bearish Than They Used To Be

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One thing we could say about the analysts on Vera Bradley, Inc. (NASDAQ:VRA) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the latest downgrade, the four analysts covering Vera Bradley provided consensus estimates of US$499m revenue in 2023, which would reflect a noticeable 5.9% decline on its sales over the past 12 months. Statutory earnings per share are anticipated to descend 13% to US$0.36 in the same period. Previously, the analysts had been modelling revenues of US$568m and earnings per share (EPS) of US$0.59 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.

Check out our latest analysis for Vera Bradley

earnings-and-revenue-growth
earnings-and-revenue-growth

The consensus price target fell 17% to US$8.00, with the weaker earnings outlook clearly leading analyst valuation estimates. 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. The most optimistic Vera Bradley analyst has a price target of US$9.00 per share, while the most pessimistic values it at US$7.00. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 7.8% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 3.7% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Vera Bradley is expected to lag the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Vera Bradley. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Vera Bradley's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Vera Bradley.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Vera Bradley analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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