Investors in Fiverr International Ltd. (NYSE:FVRR) had a good week, as its shares rose 3.4% to close at US$22.77 following the release of its quarterly results. Revenues were a bright spot, with US$28m in sales arriving 6.7% ahead of expectations, although earnings didn't fare nearly so well, recording a loss of US$0.26, some 8.3% below consensus predictions. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from Fiverr International's six analysts is for revenues of US$135.6m in 2020, which would reflect a sizeable 38% increase on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$1.07 per share. Before this earnings announcement, analysts had been forecasting revenues of US$130.5m and losses of US$1.18 per share in 2020. There's been a pretty noticeable increase in sentiment, with analysts upgrading revenues and making a modest lift to earnings per share in particular
Despite these upgrades, analysts have not made any major changes to their price target of US$28.71, implying that their latest estimates don't have a long term impact on what they think the stock is worth. 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 Fiverr International analyst has a price target of US$34.00 per share, while the most pessimistic values it at US$22.00. 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.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Fiverr International's performance in recent years. Next year brings more of the same, according to analysts, with revenue forecast to grow 38%, in line with its 41% annual growth over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 17% per year. So it's pretty clear that Fiverr International is forecast to grow substantially faster than its market.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for next year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Fiverr International going out to 2022, and you can see them free on our platform here.
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