Vital Farms, Inc. (NASDAQ:VITL) Consensus Forecasts Have Become A Little Darker Since Its Latest Report
It's been a good week for Vital Farms, Inc. (NASDAQ:VITL) shareholders, because the company has just released its latest quarterly results, and the shares gained 9.8% to US$9.52. Revenues were in line with expectations, at US$182m, while statutory losses ballooned to US$0.15 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the ten analysts covering Vital Farms are now predicting revenues of US$766.0m in 2027. If met, this would reflect a satisfactory 2.3% improvement in revenue compared to the last 12 months. Per-share statutory losses are expected to explode, reaching US$0.15 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$815.3m and earnings per share (EPS) of US$0.35 in 2027. There looks to have been a significant drop in sentiment regarding Vital Farms' prospects after these latest results, with a small dip in revenues and the analysts now forecasting a loss instead of a profit.
See our latest analysis for Vital Farms
There was no major change to the consensus price target of US$12.11, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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. Currently, the most bullish analyst values Vital Farms at US$18.00 per share, while the most bearish prices it at US$8.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. We would highlight that Vital Farms' revenue growth is expected to slow, with the forecast 1.8% annualised growth rate until the end of 2027 being well below the historical 23% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 0.7% per year. Even after the forecast slowdown in growth, it seems obvious that Vital Farms is also expected to grow faster than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Vital Farms dropped from profits to a loss next year. They also downgraded Vital Farms' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Vital Farms going out to 2028, and you can see them free on our platform here.
You can also view our analysis of Vital Farms' balance sheet, and whether we think Vital Farms is carrying too much debt, for free on our platform here.
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