Earnings Release: Here's Why Analysts Cut Their KVH Industries, Inc. (NASDAQ:KVHI) Price Target To US$13.50
It's been a pretty great week for KVH Industries, Inc. (NASDAQ:KVHI) shareholders, with its shares surging 10% to US$9.47 in the week since its latest full-year results. Revenues came in at US$172m, in line with expectations, while statutory losses per share were substantially higher than expected, at US$0.54 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on KVH Industries after the latest results.
See our latest analysis for KVH Industries
Taking into account the latest results, the consensus forecast from KVH Industries' two analysts is for revenues of US$177.7m in 2022, which would reflect a reasonable 3.4% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 45% to US$0.28. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$191.4m and losses of US$0.39 per share in 2022. Although the revenue estimates have fallen somewhat, KVH Industries'future looks a little different to the past, with a very favorable reduction to the loss per share forecasts in particular.
The analysts have cut their price target 10.0% to US$13.50per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses.
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. One thing stands out from these estimates, which is that KVH Industries is forecast to grow faster in the future than it has in the past, with revenues expected to display 3.4% annualised growth until the end of 2022. If achieved, this would be a much better result than the 0.1% annual decline 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 7.0% annually for the foreseeable future. So although KVH Industries' revenue growth is expected to improve, it is still expected to grow slower than 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of KVH Industries' future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.
You still need to take note of risks, for example - KVH Industries has 1 warning sign we think you should be aware of.
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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.
