It's been a good week for Infinera Corporation (NASDAQ:INFN) shareholders, because the company has just released its latest quarterly results, and the shares gained 7.0% to US$6.70. Revenues of US$340m arrived in line with expectations, although statutory losses per share were US$0.19, an impressive 21% smaller than what broker models predicted. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Infinera after the latest results.
Taking into account the latest results, the current consensus from Infinera's 13 analysts is for revenues of US$1.47b in 2021, which would reflect a reasonable 6.4% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 85% to US$0.22. Before this latest report, the consensus had been expecting revenues of US$1.48b and US$0.39 per share in losses. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading revenues and making a losses per share in particular.
The average price target held steady at US$9.13, seeming to indicate that business is performing in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Infinera, with the most bullish analyst valuing it at US$15.00 and the most bearish at US$5.00 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Infinera's revenue growth is expected to slow, with forecast 6.4% increase next year well below the historical 11%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.2% next year. Even after the forecast slowdown in growth, it seems obvious that Infinera is also expected to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Infinera going out to 2022, and you can see them free on our platform here.
It is also worth noting that we have found 5 warning signs for Infinera that you need to take into consideration.
This article by Simply Wall St is general in nature. 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.
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