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Commvault Systems, Inc. (NASDAQ:CVLT) shareholders are probably feeling a little disappointed, since its shares fell 4.6% to US$40.00 in the week after its latest quarterly results. The results don't look great, especially considering that statutory losses grew 1,171% toUS$0.89 per share. Revenues of US$171m did beat expectations by 3.9%, but it looks like a bit of a cold comfort. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following last week's earnings report, Commvault Systems' nine analysts are forecasting 2021 revenues to be US$694.6m, approximately in line with the last 12 months. Losses are presumed to be contained, narrowing 19% from last year to US$0.79, on a statutory basis. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$684.1m and earnings per share (EPS) of US$0.07 in 2021. So despite reconfirming their revenue estimates, the analysts are now forecasting a loss instead of a profit, which looks like a definite drop in sentiment following the latest results.
The consensus price target held steady at US$52.43, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Commvault Systems at US$60.00 per share, while the most bearish prices it at US$45.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Commvault Systems is an easy business to forecast or the the analysts are all using similar 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. It's pretty clear that there is an expectation that Commvault Systems' revenue growth will slow down substantially, with revenues next year expected to grow 1.4%, compared to a historical growth rate of 3.4% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 13% next 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 Commvault Systems.
The Bottom Line
The biggest low-light for us was that the forecasts for Commvault Systems dropped from profits to a loss next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Commvault Systems' revenues are expected to perform worse 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.
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. At Simply Wall St, we have a full range of analyst estimates for Commvault Systems going out to 2025, and you can see them free on our platform here..
You still need to take note of risks, for example - Commvault Systems has 2 warning signs we think you should be aware of.
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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