Last week saw the newest quarterly earnings release from Sleep Number Corporation (NASDAQ:SNBR), an important milestone in the company's journey to build a stronger business. It was a pretty bad result overall; while revenues were in line with expectations at US$393m, statutory losses exploded to US$0.38 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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After the latest results, the consensus from Sleep Number's five analysts is for revenues of US$1.52b in 2025, which would reflect a small 5.6% decline in revenue compared to the last year of performance. Losses are predicted to fall substantially, shrinking 49% to US$0.48. Before this latest report, the consensus had been expecting revenues of US$1.57b and US$0.52 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.

See our latest analysis for Sleep Number

The consensus price target fell 17% to US$8.33, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. 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. Currently, the most bullish analyst values Sleep Number at US$12.00 per share, while the most bearish prices it at US$6.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for 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 Sleep Number's past performance and to peers in the same industry. One more thing stood out to us about these estimates, and it's the idea that Sleep Number's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 7.4% to the end of 2025. This tops off a historical decline of 1.5% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 5.0% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Sleep Number to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Still, earnings per share are more important to value creation for shareholders. 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 Sleep Number. Long-term earnings power is much more important than next year's profits. We have forecasts for Sleep Number going out to 2027, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for Sleep Number 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.