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8x8, Inc. (NYSE:EGHT) came out with its first-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues of US$148m beat expectations by a respectable 3.7%, although statutory losses per share increased. 8x8 lost US$0.40, which was 24% more than what the analysts had included in their models. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, 8x8's 16 analysts are now forecasting revenues of US$609.8m in 2022. This would be a meaningful 9.1% improvement in sales compared to the last 12 months. Losses are expected to be contained, narrowing 14% from last year to US$1.35. Before this latest report, the consensus had been expecting revenues of US$603.1m and US$1.27 per share in losses. So it's pretty clear consensus is mixed on 8x8 after the new consensus numbers; while the analysts held their revenue numbers steady, they also administered a moderate increase in per-share loss expectations.
As a result, there was no major change to the consensus price target of US$34.80, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. 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 8x8, with the most bullish analyst valuing it at US$50.00 and the most bearish at US$24.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that 8x8's revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2022 being well below the historical 19% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 14% annually. So it's pretty clear that, while 8x8's revenue growth is expected to slow, it's expected to grow roughly in line with the 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 reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for 8x8 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 4 warning signs for 8x8 that we have uncovered.
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.
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