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Market forces rained on the parade of Porch Group, Inc. (NASDAQ:PRCH) shareholders today, when the analysts downgraded their forecasts for next year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Investors however, have been notably more optimistic about Porch Group recently, with the stock price up a majestic 57% to US$3.18 in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.
Following the latest downgrade, Porch Group's six analysts currently expect revenues in 2025 to be US$450m, approximately in line with the last 12 months. Before the latest update, the analysts were foreseeing US$511m of revenue in 2025. It looks like forecasts have become a fair bit less optimistic on Porch Group, given the substantial drop in revenue estimates.
View our latest analysis for Porch Group
The consensus price target rose 11% to US$4.25, with the analysts clearly more optimistic about Porch Group's prospects following this update.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Porch Group's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 0.4% by the end of 2025. This indicates a significant reduction from annual growth of 40% 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 12% per year. It's pretty clear that Porch Group's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Porch Group next year. They're also anticipating slower revenue growth than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Porch Group after today.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Porch Group's business, like dilutive stock issuance over the past year. Learn more, and discover the 2 other concerns we've identified, for free on our platform here.