The investors in KORE Group Holdings, Inc.'s (NYSE:KORE) will be rubbing their hands together with glee today, after the share price leapt 31% to US$4.36 in the week following its quarterly results. Results overall weren't great; even though revenues of US$69m beat expectations by 11%, statutory losses ballooned to US$0.15 per share, substantially worse than the analysts had expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following last week's earnings report, KORE Group Holdings' five analysts are forecasting 2022 revenues to be US$267.0m, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 40% to US$0.36. Before this earnings announcement, the analysts had been modelling revenues of US$261.9m and losses of US$0.32 per share in 2022. While this year's revenue estimates held steady, there was also a notable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 11% to US$10.10, with the analysts signalling that growing losses would be a definite concern. 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. Currently, the most bullish analyst values KORE Group Holdings at US$14.00 per share, while the most bearish prices it at US$5.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
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. It's pretty clear that there is an expectation that KORE Group Holdings' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 2.6% growth on an annualised basis. This is compared to a historical growth rate of 20% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.7% per year. Factoring in the forecast slowdown in growth, it seems obvious that KORE Group Holdings is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on KORE Group Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple KORE Group Holdings analysts - going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for KORE Group Holdings you should be aware of.
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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.