Aspen Technology, Inc. Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models
Analysts might have been a bit too bullish on Aspen Technology, Inc. (NASDAQ:AZPN), given that the company fell short of expectations when it released its second-quarter results last week. Aspen Technology missed earnings this time around, with US$125m revenue coming in 7.9% below what analysts had modelled. Statutory earnings per share (EPS) of US$0.56 also fell short of expectations by 10%. Following the result, 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 analysts have changed their earnings models, following these results.
View our latest analysis for Aspen Technology
Following last week's earnings report, Aspen Technology's eight analysts are forecasting 2020 revenues to be US$600.3m, approximately in line with the last 12 months. Statutory earnings per share are expected to decline 16% to US$3.06 in the same period. Before this earnings report, analysts had been forecasting revenues of US$602.6m and earnings per share (EPS) of US$3.09 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$143. 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. Currently, the most bullish analyst values Aspen Technology at US$160 per share, while the most bearish prices it at US$121. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.4% a significant reduction from annual growth of 6.6% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 12% next year. It's pretty clear that Aspen Technology's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Aspen Technology's revenues are expected to perform worse than the wider market. The consensus price target held steady at US$143, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Aspen Technology going out to 2022, and you can see them free on our platform here..
You can also see whether Aspen Technology is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.
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