Earnings Update: Here's Why Analysts Just Lifted Their Q2 Holdings, Inc. (NYSE:QTWO) Price Target To US$48.80
It's been a pretty great week for Q2 Holdings, Inc. (NYSE:QTWO) shareholders, with its shares surging 12% to US$47.57 in the week since its latest yearly results. Revenues came in at US$625m, in line with forecasts and the company reported a statutory loss of US$1.12 per share, roughly in line with expectations. 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.
See our latest analysis for Q2 Holdings
Taking into account the latest results, the consensus forecast from Q2 Holdings' 14 analysts is for revenues of US$686.0m in 2024. This reflects a decent 9.8% improvement in revenue compared to the last 12 months. Losses are supposed to decline, shrinking 18% from last year to US$0.91. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$685.0m and losses of US$1.10 per share in 2024. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading their numbers and making a cut to losses per share in particular.
The average price target rose 12% to US$48.80, with the analysts signalling that the forecast reduction in losses would be a positive for the stock'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. There are some variant perceptions on Q2 Holdings, with the most bullish analyst valuing it at US$58.00 and the most bearish at US$40.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Q2 Holdings' revenue growth is expected to slow, with the forecast 9.8% annualised growth rate until the end of 2024 being well below the historical 18% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 12% annually. Factoring in the forecast slowdown in growth, it seems obvious that Q2 Holdings is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider 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. At Simply Wall St, we have a full range of analyst estimates for Q2 Holdings going out to 2026, and you can see them free on our platform here..
It is also worth noting that we have found 3 warning signs for Q2 Holdings that you need to take into consideration.
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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.
