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Today is shaping up negative for Holley Inc. (NYSE:HLLY) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the consensus from eight analysts covering Holley is for revenues of US$709m in 2022, implying a discernible 3.2% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$790m in 2022. It looks like forecasts have become a fair bit less optimistic on Holley, given the substantial drop in revenue estimates.
See our latest analysis for Holley
The consensus price target fell 31% to US$10.57, with the analysts clearly less optimistic about Holley's valuation following this update. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Holley, with the most bullish analyst valuing it at US$13.00 and the most bearish at US$9.00 per share. 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 Holley shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Holley's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 4.2% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 30% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 15% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Holley is expected to lag the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Holley this year. They also expect company revenue to perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Holley's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Holley after today.
Thirsting for more data? At least one of Holley's eight analysts has provided estimates out to 2024, which can be seen for free on our platform here.