It's been a pretty great week for Zovio Inc (NASDAQ:ZVO) shareholders, with its shares surging 16% to US$1.90 in the week since its latest yearly results. It was an okay report, and revenues came in at US$418m, approximately in line with analyst estimates leading up to the results announcement. 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. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the sole analyst covering Zovio provided consensus estimates of US$337.5m revenue in 2020, which would reflect a considerable 19% decline on its sales over the past 12 months. Prior to the latest earnings, analysts were forecasting revenues of US$340.0m in 2020, and did not provide an EPS estimate. Overall it looks like Zovio is performing in line with analyst expectations, given analysts have updated their numbers and there's been no real change to next year's forecast following these results.
The average analyst price target fell 15% to US$10.00, with analysts clearly having become less optimistic about Zovio's prospects following its latest earnings.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. One thing that stands out from these estimates is that, even though revenues are forecast to keep falling, the decline is expected to accelerate. Analysts have modelled a 19% decline next year, compared to a historical decline of 8.6% per annum for the past five years. Compare this with our data on other companies (with analyst coverage) in a similar industry, which in aggregate are forecast to see their revenue decline 17% per year. It seems clear that while revenues are expected to continue declining, analysts also expect the downturn to be more severe than that of the wider market.
The Bottom Line
Probably the biggest thing to take away from these latest forecasts is that brokers are definitely optimistic on the business, given the forecast for profitability next year. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
We have estimates for Zovio from one covering analyst, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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