LifeSpeak Inc. (TSE:LSPK) Analysts Are Cutting Their Estimates: Here's What You Need To Know
The analysts might have been a bit too bullish on LifeSpeak Inc. (TSE:LSPK), given that the company fell short of expectations when it released its second-quarter results last week. It was a pretty negative result overall, with revenues of CA$12m missing analyst predictions by 5.4%. Worse, the business reported a statutory loss of CA$0.13 per share, much larger than the analysts had forecast prior to the result. 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 LifeSpeak after the latest results.
View our latest analysis for LifeSpeak
After the latest results, the seven analysts covering LifeSpeak are now predicting revenues of CA$50.0m in 2022. If met, this would reflect a substantial 49% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 46% to CA$0.53. Yet prior to the latest earnings, the analysts had been forecasting revenues of CA$52.8m and losses of CA$0.43 per share in 2022. While this year's revenue estimates dropped there was also a sizeable expansion in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The average price target fell 8.8% to CA$3.13, implicitly signalling that lower earnings per share are a leading indicator for LifeSpeak's valuation. 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. The most optimistic LifeSpeak analyst has a price target of CA$4.50 per share, while the most pessimistic values it at CA$1.50. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. We can infer from the latest estimates that forecasts expect a continuation of LifeSpeak'shistorical trends, as the 121% annualised revenue growth to the end of 2022 is roughly in line with the 107% annual revenue growth over the past year. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 18% annually. So although LifeSpeak is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that LifeSpeak's revenues are expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
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 LifeSpeak going out to 2024, and you can see them free on our platform here.
Even so, be aware that LifeSpeak is showing 4 warning signs in our investment analysis , and 1 of those shouldn't be ignored...
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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.
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