PAR Technology Corporation (NYSE:PAR) Released Earnings Last Week And Analysts Lifted Their Price Target To US$49.25

Simply Wall St
·4 min read

A week ago, PAR Technology Corporation (NYSE:PAR) came out with a strong set of third-quarter numbers that could potentially lead to a re-rate of the stock. Results overall were solid, with revenues arriving 5.8% better than analyst forecasts at US$55m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.20 per share, were 5.8% smaller than the analysts 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for PAR Technology

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earnings-and-revenue-growth

Following the latest results, PAR Technology's four analysts are now forecasting revenues of US$250.3m in 2021. This would be a substantial 20% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 45% to US$0.91. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$249.4m and losses of US$0.95 per share in 2021. 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 next year.

The average price target rose 8.2% to US$49.25, with the analysts signalling that the forecast reduction in losses would be a positive for the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values PAR Technology at US$50.00 per share, while the most bearish prices it at US$45.00. This is a very narrow spread of estimates, implying either that PAR Technology is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One thing stands out from these estimates, which is that PAR Technology is forecast to grow faster in the future than it has in the past, with revenues expected to grow 20%. If achieved, this would be a much better result than the 4.7% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 7.6% per year. Not only are PAR Technology's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for PAR Technology going out to 2022, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 4 warning signs for PAR Technology that you should be aware of.

This article by Simply Wall St is general in nature. 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.

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

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