Last week saw the newest quarterly earnings release from Otello Corporation ASA (OB:OTELLO), an important milestone in the company's journey to build a stronger business. Otello reported in line with analyst predictions, delivering revenues of US$63m and earnings per share of US$0.05, suggesting the business is executing well and in line with its plan. 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 thought readers would find it interesting to see analysts' latest post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Otello's sole analyst is for revenues of US$249.4m in 2020, which would reflect a reasonable 4.9% increase on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$0.021 per share. Before this latest report, the consensus had been expecting revenues of US$253.8m and US$0.01 per share in losses. So there's definitely been a decline in analyst sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
As a result, there was no major change to the consensus price target of kr26.00, with analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Otello's past performance and to peers in the same market. For example, we noticed that Otello's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow at 4.9%, well above its historical decline of 12% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue grow 2.9% per year. Although Otello's revenues are expected to improve, it seems that analysts are also expecting it to grow faster than the wider market.
The Bottom Line
The most important thing to take away is that analysts reconfirmed their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Otello. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Otello going out as far as 2021, and you can see them free on our platform here.
We also provide an overview of the Otello Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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