Limelight Networks, Inc. (NASDAQ:LLNW) Just Reported, And Analysts Assigned A US$3.61 Price Target
It's shaping up to be a tough period for Limelight Networks, Inc. (NASDAQ:LLNW), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. It was a pretty negative result overall, with revenues of US$48m missing analyst predictions by 7.3%. Worse, the business reported a statutory loss of US$0.11 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
See our latest analysis for Limelight Networks
After the latest results, the eight analysts covering Limelight Networks are now predicting revenues of US$218.5m in 2021. If met, this would reflect a reasonable 2.0% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 21% to US$0.33. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$220.7m and losses of US$0.29 per share in 2021. While this year's revenue estimates held steady, there was also a considerable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The consensus price target fell 11% to US$3.61per share, with the analysts clearly concerned by ballooning losses. 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. Currently, the most bullish analyst values Limelight Networks at US$5.00 per share, while the most bearish prices it at US$2.50. 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Limelight Networks' revenue growth is expected to slow, with the forecast 4.0% annualised growth rate until the end of 2021 being well below the historical 6.4% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 15% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Limelight Networks.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse 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 estimates - from multiple Limelight Networks analysts - going out to 2023, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Limelight Networks 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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