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As you might know, Dynatrace, Inc. (NYSE:DT) just kicked off its latest third-quarter results with some very strong numbers. The company beat both earnings and revenue forecasts, with revenue of US$183m, some 6.1% above estimates, and statutory earnings per share (EPS) coming in at US$0.06, 285% ahead of expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Dynatrace after the latest results.
After the latest results, the 19 analysts covering Dynatrace are now predicting revenues of US$849.4m in 2022. If met, this would reflect a sizeable 29% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to crater 23% to US$0.26 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$823.5m and earnings per share (EPS) of US$0.26 in 2022. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a small increase to to revenue forecasts.
The analysts increased their price target 19% to US$59.52, perhaps signalling that higher revenues are a strong leading indicator for Dynatrace's valuation. 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. The most optimistic Dynatrace analyst has a price target of US$66.00 per share, while the most pessimistic values it at US$40.00. 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. It's clear from the latest estimates that Dynatrace's rate of growth is expected to accelerate meaningfully, with the forecast 29% revenue growth noticeably faster than its historical growth of 19%p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Dynatrace to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Dynatrace going out to 2025, and you can see them free on our platform here..
You still need to take note of risks, for example - Dynatrace has 3 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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