Analysts Have Been Trimming Their Zuora, Inc. (NYSE:ZUO) Price Target After Its Latest Report
Shareholders might have noticed that Zuora, Inc. (NYSE:ZUO) filed its annual result this time last week. The early response was not positive, with shares down 2.2% to US$8.01 in the past week. The statutory results were mixed overall, with revenues of US$432m in line with analyst forecasts, but losses of US$0.49 per share, some 2.1% larger than the analysts were predicting. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for Zuora
Taking into account the latest results, the current consensus from Zuora's six analysts is for revenues of US$453.7m in 2025. This would reflect an okay 5.1% increase on its revenue over the past 12 months. Losses are predicted to fall substantially, shrinking 42% to US$0.28. Before this earnings announcement, the analysts had been modelling revenues of US$471.7m and losses of US$0.36 per share in 2025. Although the revenue estimates have fallen somewhat, Zuora'sfuture looks a little different to the past, with a very favorable reduction to the loss per share forecasts in particular.
The consensus price target fell 7.4% to US$11.57, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. 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 Zuora, with the most bullish analyst valuing it at US$15.00 and the most bearish at US$8.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. We would highlight that Zuora's revenue growth is expected to slow, with the forecast 5.1% annualised growth rate until the end of 2025 being well below the historical 12% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Zuora.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Yet - earnings are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Zuora's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Zuora. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Zuora going out to 2027, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Zuora , and understanding these should be part of your investment process.
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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.
