European Wax Center, Inc. (NASDAQ:EWCZ) Analysts Are Cutting Their Estimates: Here's What You Need To Know

There's been a major selloff in European Wax Center, Inc. (NASDAQ:EWCZ) shares in the week since it released its yearly report, with the stock down 26% to US$4.21. It was an okay report, and revenues came in at US$217m, approximately in line with analyst estimates leading up to the results announcement. 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.

See our latest analysis for European Wax Center

Taking into account the latest results, the current consensus, from the eight analysts covering European Wax Center, is for revenues of US$211.8m in 2025. This implies a discernible 2.3% reduction in European Wax Center's revenue over the past 12 months. Statutory earnings per share are forecast to dive 50% to US$0.12 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$224.4m and earnings per share (EPS) of US$0.35 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.

The consensus price target fell 17% to US$6.69, with the weaker earnings outlook clearly leading valuation estimates. 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. There are some variant perceptions on European Wax Center, with the most bullish analyst valuing it at US$15.00 and the most bearish at US$4.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 2.3% by the end of 2025. This indicates a significant reduction from annual growth of 13% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 10% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - European Wax Center is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of European Wax Center's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for European Wax Center going out to 2027, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for European Wax Center you should be aware of, and 1 of them is a bit concerning.

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