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Earnings Update: Here's Why Analysts Just Lifted Their Rimini Street, Inc. (NASDAQ:RMNI) Price Target To US$13.50

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Simply Wall St
·3 min read
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Shareholders will be ecstatic, with their stake up 32% over the past week following Rimini Street, Inc.'s (NASDAQ:RMNI) latest annual results. Revenues were in line with expectations, at US$327m, while statutory losses ballooned to US$0.19 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Rimini Street

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the consensus forecast from Rimini Street's five analysts is for revenues of US$366.5m in 2021, which would reflect a notable 12% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 54% to US$0.09. Before this latest report, the consensus had been expecting revenues of US$366.5m and US$0.09 per share in losses.

The average price target fell 16% to US$13.50, with the ongoing losses seemingly a concern for the analysts, despite the lack of real change to the earnings forecasts. 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 Rimini Street analyst has a price target of US$15.00 per share, while the most pessimistic values it at US$10.00. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Rimini Street's revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2021 being well below the historical 17% p.a. growth over the last five years. Compare this to the 424 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 13% per year. So it's pretty clear that, while Rimini Street'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 take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Rimini Street analysts - going out to 2022, and you can see them free on our platform here.

You still need to take note of risks, for example - Rimini Street has 3 warning signs (and 1 which is potentially serious) we think you should know about.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.