It's been a good week for Quotient Limited (NASDAQ:QTNT) shareholders, because the company has just released its latest annual results, and the shares gained 5.1% to US$7.33. It looks like a positive result overall, with revenues of US$33m beating forecasts by 2.4%. Statutory losses of US$1.44 per share were roughly in line with what the analysts had forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from Quotient's three analysts is for revenues of US$36.0m in 2021, which would reflect a meaningful 10% increase on its sales over the past 12 months. Losses are forecast to narrow 5.9% to US$1.35 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$33.0m and losses of US$1.24 per share in 2021. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although there was a nice uplift to revenue, the consensus also made a to its losses per share forecasts.
There was no major change to the consensus price target of US$13.50, with growing revenues seemingly enough to offset the concern of growing 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. The most optimistic Quotient analyst has a price target of US$14.00 per share, while the most pessimistic values it at US$13.00. This is a very narrow spread of estimates, implying either that Quotient is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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. We would highlight that Quotient's revenue growth is expected to slow, with forecast 10% increase next year well below the historical 13%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) 10.0% next year. So it's pretty clear that, while Quotient'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 note is the forecast of increased losses next year, suggesting all may not be well at Quotient. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target held steady at US$13.50, with the latest estimates not enough to have an impact on their price targets.
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. We have estimates - from multiple Quotient analysts - going out to 2022, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 3 warning signs for Quotient that you need to be mindful of.
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