QAD Inc. (NASDAQ:QADA) Released Earnings Last Week And Analysts Lifted Their Price Target To US$51.00
It's been a good week for QAD Inc. (NASDAQ:QADA) shareholders, because the company has just released its latest quarterly results, and the shares gained 7.1% to US$45.67. Revenues of US$74m arrived in line with expectations, although statutory losses per share were US$0.02, an impressive 56% smaller than what broker models predicted. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 QAD
Taking into account the latest results, QAD's four analysts currently expect revenues in 2021 to be US$305.9m, approximately in line with the last 12 months. QAD is also expected to turn profitable, with statutory earnings of US$0.027 per share. In the lead-up to this report, the analysts had been modelling revenues of US$309.0m and earnings per share (EPS) of US$0.045 in 2021. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.
Despite cutting their earnings forecasts,the analysts have lifted their price target 10% to US$51.00, suggesting that these impacts are not expected to weigh on the stock's value in the long term. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic QAD analyst has a price target of US$55.00 per share, while the most pessimistic values it at US$48.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
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 sales are expected to reverse, with the forecast 0.3% revenue decline a notable change from historical growth of 3.1% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 12% next year. It's pretty clear that QAD's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for QAD. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that QAD's revenues are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple QAD analysts - going out to 2022, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with QAD .
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