It's been a good week for Immersion Corporation (NASDAQ:IMMR) shareholders, because the company has just released its latest first-quarter results, and the shares gained 2.5% to US$7.05. It was a pretty bad result overall; while revenues were in line with expectations at US$6.3m, statutory losses exploded to US$0.16 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Immersion after the latest results.
Taking into account the latest results, the two analysts covering Immersion provided consensus estimates of US$30.3m revenue in 2020, which would reflect an uneasy 18% decline on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 73% to US$0.12. Before this earnings announcement, the analysts had been modelling revenues of US$33.0m and losses of US$0.07 per share in 2020. So it's pretty clear the analysts have mixed opinions on Immersion after this update; revenues were downgraded and per-share losses expected to increase.
The consensus price target fell 8.3% to US$11.00, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Immersion'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 Immersion'sdecline is expected to accelerate, with revenues forecast to fall 18% next year, topping off a historical decline of 2.0% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 6.5% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Immersion to suffer worse than the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Immersion. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for Immersion you should know about.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.