Results: MicroStrategy Incorporated Exceeded Expectations And The Consensus Has Updated Its Estimates
It's been a good week for MicroStrategy Incorporated (NASDAQ:MSTR) shareholders, because the company has just released its latest yearly results, and the shares gained 6.7% to US$153. Revenues were US$486m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$3.33 were also better than expected, beating analyst predictions by 12%. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for MicroStrategy
Following the latest results, MicroStrategy's one analyst are now forecasting revenues of US$527.5m in 2020. This would be a notable 8.5% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to accumulate 4.2% to US$3.49. Yet prior to the latest earnings, analysts had been forecasting revenues of US$521.0m and earnings per share (EPS) of US$3.69 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at US$175, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. One thing stands out from these estimates, which is that analysts are forecasting MicroStrategy to grow faster in the future than it has in the past, with revenues expected to grow 8.5%. If achieved, this would be a much better result than the 3.0% annual decline over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 12% next year. Although MicroStrategy's revenues are expected to improve, it seems that analysts are still bearish on the business, forecasting it to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse 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.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for MicroStrategy going out as far as 2020, and you can see them free on our platform here.
We also provide an overview of the MicroStrategy Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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