It's been a mediocre week for Wag! Group Co. (NASDAQ:PET) shareholders, with the stock dropping 18% to US$0.95 in the week since its latest quarterly results. Revenues of US$19m were in line with expectations, although statutory losses per share were US$0.06, some 12% smaller than was expected. 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.

Following the latest results, Wag! Group's six analysts are now forecasting revenues of US$90.6m in 2024. This would be a modest 6.2% improvement in revenue compared to the last 12 months. Losses are expected to be contained, narrowing 19% from last year to US$0.24. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$93.4m and losses of US$0.24 per share in 2024. Overall it looks as though the analysts are negative in this update. Although revenue forecasts held steady, the consensus also made a pronounced increase to to its losses per share forecasts.

The average price target fell 18% to US$3.83, implicitly signalling that lower earnings per share are a leading indicator for Wag! Group's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Wag! Group, with the most bullish analyst valuing it at US$8.00 and the most bearish at US$2.00 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Wag! Group's past performance and to peers in the same industry. We would highlight that Wag! Group's revenue growth is expected to slow, with the forecast 13% annualised growth rate until the end of 2024 being well below the historical 17% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 10% per year. So it's pretty clear that, while Wag! Group's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Wag! Group. They also downgraded Wag! Group's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Wag! Group analysts - going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 4 warning signs we've spotted with Wag! Group (including 1 which doesn't sit too well with us) .

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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.