The investors in VerticalScope Holdings Inc.'s (TSE:FORA) will be rubbing their hands together with glee today, after the share price leapt 81% to CA$13.30 in the week following its second-quarter results. Revenues of US$22m beat expectations by a respectable 4.5%, although statutory losses per share increased. VerticalScope Holdings lost US$0.33, which was 275% more than what the analysts had included in their models. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the consensus forecast from VerticalScope Holdings' six analysts is for revenues of US$89.5m in 2022, which would reflect a notable 16% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 22% to US$1.01. Before this latest report, the consensus had been expecting revenues of US$91.5m and US$0.57 per share in losses. So it's pretty clear the analysts have mixed opinions on VerticalScope Holdings after this update; revenues were downgraded and per-share losses expected to increase.
The consensus price target fell 9.9% to CA$23.63, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. There are some variant perceptions on VerticalScope Holdings, with the most bullish analyst valuing it at CA$28.09 and the most bearish at CA$19.99 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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. The analysts are definitely expecting VerticalScope Holdings' growth to accelerate, with the forecast 34% annualised growth to the end of 2022 ranking favourably alongside historical growth of 21% per annum over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect VerticalScope Holdings to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that VerticalScope Holdings' revenues are expected to grow faster 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 VerticalScope Holdings' future valuation.
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 forecasts for VerticalScope Holdings going out to 2024, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for VerticalScope Holdings (1 doesn't sit too well with us!) that we have uncovered.
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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.
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