One of the biggest stories of last week was how Rent the Runway, Inc. (NASDAQ:RENT) shares plunged 22% in the week since its latest third-quarter results, closing yesterday at US$9.15. Revenues came in at US$76m, in line with forecasts and the company reported a statutory loss of US$4.94 per share, roughly in line with expectations. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Rent the Runway after the latest results.

Taking into account the latest results, the most recent consensus for Rent the Runway from two analysts is for revenues of US$319.8m in 2026. If met, it would imply a modest 4.6% increase on its revenue over the past 12 months. The loss per share is expected to ameliorate slightly, reducing to US$19.28. Before this latest report, the consensus had been expecting revenues of US$327.0m and US$17.90 per share in losses. Overall it looks as though the analysts are negative in this update. Although revenue forecasts held steady, the consensus also made a modest increase to to its losses per share forecasts.

The consensus price target fell 7.6% to US$30.50, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.

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 Rent the Runway's revenue growth is expected to slow, with the forecast 3.7% annualised growth rate until the end of 2026 being well below the historical 14% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.7% annually. Factoring in the forecast slowdown in growth, it seems obvious that Rent the Runway is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Rent the Runway. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Rent the Runway going out as far as 2027, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 7 warning signs for Rent the Runway (3 are a bit unpleasant) you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.