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There's been a notable change in appetite for Bandwidth Inc. (NASDAQ:BAND) shares in the week since its annual report, with the stock down 16% to US$158. The results don't look great, especially considering that statutory losses grew 76% toUS$1.83 per share. Revenues of US$343m did beat expectations by 5.0%, but it looks like a bit of a cold comfort. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Bandwidth's ten analysts is for revenues of US$464.8m in 2021, which would reflect a huge 35% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 59% to US$0.75. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$452.5m and losses of US$0.14 per share in 2021. While this year's revenue estimates increased, there was also a very substantial increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The consensus price target stayed unchanged at US$199, seeming to suggest that higher forecast losses are not expected to have a long term impact on the valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Bandwidth, with the most bullish analyst valuing it at US$227 and the most bearish at US$145 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
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. The analysts are definitely expecting Bandwidth's growth to accelerate, with the forecast 35% growth ranking favourably alongside historical growth of 18% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 1.6% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Bandwidth is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than 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 in mind, we wouldn't be too quick to come to a conclusion on Bandwidth. 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 Bandwidth going out to 2023, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 2 warning signs for Bandwidth you should be aware of, and 1 of them makes us a bit uncomfortable.
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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