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It's been a good week for Qualys, Inc. (NASDAQ:QLYS) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.9% to US$107. Revenues were US$100m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.53 were also better than expected, beating analyst predictions by 11%. Following the result, the 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from Qualys' 14 analysts is for revenues of US$406.7m in 2021, which would reflect a reasonable 5.8% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to sink 18% to US$1.42 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$403.3m and earnings per share (EPS) of US$1.22 in 2021. Although the revenue estimates have not really changed, we can see there's been a solid gain to earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The consensus price target was unchanged at US$112, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Qualys, with the most bullish analyst valuing it at US$130 and the most bearish at US$99.00 per share. This is a very narrow spread of estimates, implying either that Qualys is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Qualys' past performance and to peers in the same industry. We would highlight that Qualys' revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2021 being well below the historical 15% p.a. growth over the last five years. Compare this to the 466 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 14% per year. Factoring in the forecast slowdown in growth, it looks like Qualys is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Qualys' earnings potential next year. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$112, with the latest estimates not enough to have an impact on their price targets.
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 Qualys analysts - going out to 2023, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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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