Last week, you might have seen that Sleep Number Corporation (NASDAQ:SNBR) released its third-quarter result to the market. The early response was not positive, with shares down 5.9% to US$12.71 in the past week. Results look to have been somewhat negative - revenue fell 4.3% short of analyst estimates at US$427m, although statutory losses were somewhat better. The per-share loss was US$0.14, 35% smaller than the analysts were expecting prior to the result. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Taking into account the latest results, Sleep Number's five analysts currently expect revenues in 2025 to be US$1.76b, approximately in line with the last 12 months. Earnings are expected to improve, with Sleep Number forecast to report a statutory profit of US$0.55 per share. Before this earnings report, the analysts had been forecasting revenues of US$1.81b and earnings per share (EPS) of US$0.59 in 2025. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

The analysts made no major changes to their price target of US$13.67, suggesting the downgrades are not expected to have a long-term impact on Sleep Number's valuation. 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. Currently, the most bullish analyst values Sleep Number at US$16.00 per share, while the most bearish prices it at US$12.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Sleep Number is an easy business to forecast or the the analysts are all using similar assumptions.

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. It's pretty clear that there is an expectation that Sleep Number's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 1.0% growth on an annualised basis. This is compared to a historical growth rate of 1.6% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.8% annually. Factoring in the forecast slowdown in growth, it seems obvious that Sleep Number is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Sleep Number. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse 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 Sleep Number going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Sleep Number has 3 warning signs (and 2 which shouldn't be ignored) we think you should know about.

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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.