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There's been a notable change in appetite for ServiceSource International, Inc. (NASDAQ:SREV) shares in the week since its full-year report, with the stock down 12% to US$1.68. The statutory results were not great - while revenues of US$216m were in line with expectations,ServiceSource International lost US$0.20 a share in the process. 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. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
Taking into account the latest results, the lone analyst covering ServiceSource International provided consensus estimates of US$196.5m revenue in 2020, which would reflect a chunky 9.1% decline on its sales over the past 12 months. Per-share losses are expected to creep up to US$0.18, on a statutory basis. Before this latest report, the consensus had been expecting revenues of US$203.5m and US$0.21 per share in losses. While revenue forecasts have been revised downwards, analysts look to have become more optimistic on the company's earnings power, given the decent improvement in to earnings per share forecasts.
The consensus price target rose 13% to US$2.25, with analysts increasingly optimistic about shrinking losses, despite the expected decline in sales.
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 obvious concern is that although revenues are forecast to continue shrinking, the expected 9.1% decline next year is substantially more severe than the 3.5% annual decline 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 decline 11% per year. So it looks like ServiceSource International is also expected to see its revenues decline at a faster rate than the wider market.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for next year. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Yet - earnings are more important to the intrinsic value of the business. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
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