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It's been a sad week for Adairs Limited (ASX:ADH), who've watched their investment drop 17% to AU$2.33 in the week since the company reported its half-year result. Results overall were respectable, with statutory earnings of AU$0.18 per share roughly in line with what the analysts had forecast. Revenues of AU$311m came in 2.5% ahead of analyst predictions. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Check out our latest analysis for Adairs
Taking into account the latest results, the consensus forecast from Adairs' eight analysts is for revenues of AU$617.4m in 2025. This reflects an okay 2.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to grow 17% to AU$0.22. In the lead-up to this report, the analysts had been modelling revenues of AU$619.9m and earnings per share (EPS) of AU$0.22 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at AU$2.69, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. The most optimistic Adairs analyst has a price target of AU$3.25 per share, while the most pessimistic values it at AU$2.40. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Adairs shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Adairs' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 5.0% growth on an annualised basis. This is compared to a historical growth rate of 9.9% over the past five years. Compare this to the 25 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.9% per year. Factoring in the forecast slowdown in growth, it looks like Adairs is forecast to grow at about the same rate as the wider industry.