Earnings Update: Here's Why Analysts Just Lifted Their TrueCar, Inc. (NASDAQ:TRUE) Price Target To US$4.28
There's been a notable change in appetite for TrueCar, Inc. (NASDAQ:TRUE) shares in the week since its yearly report, with the stock down 14% to US$3.38. The results look positive overall; while revenues of US$159m were in line with analyst predictions, statutory losses were 6.5% smaller than expected, with TrueCar losing US$0.55 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on TrueCar after the latest results.
Check out our latest analysis for TrueCar
Taking into account the latest results, the most recent consensus for TrueCar from five analysts is for revenues of US$183.1m in 2024. If met, it would imply a solid 15% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 64% to US$0.20. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$191.2m and losses of US$0.15 per share in 2024. So it's pretty clear the analysts have mixed opinions on TrueCar after this update; revenues were downgraded and per-share losses expected to increase.
The average price target lifted 16% to US$4.28, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer term. 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. Currently, the most bullish analyst values TrueCar at US$5.00 per share, while the most bearish prices it at US$3.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. For example, we noticed that TrueCar's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 15% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 19% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 9.9% annually. Not only are TrueCar's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded TrueCar's revenue estimates, but industry data suggests that it is expected 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.
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 TrueCar going out to 2026, and you can see them free on our platform here..
Before you take the next step you should know about the 1 warning sign for TrueCar that we have uncovered.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
