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It's been a good week for Aspen Group, Inc. (NASDAQ:ASPU) shareholders, because the company has just released its latest second-quarter results, and the shares gained 9.1% to US$7.55. The results don't look great, especially considering that losses grew 56% toUS$0.03 per share. Revenues of US$12m did beat expectations by 4.2%, but it looks like a bit of a cold comfort. 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. Readers will be glad to know we've aggregated the latest forecasts to see whether analysts have changed their mind on Aspen Group after the latest results.
Following the latest results, Aspen Group's five analysts are now forecasting revenues of US$48.1m in 2020. This would be a meaningful 17% improvement in sales compared to the last 12 months. Losses are forecast to balloon 38% to US$0.22 per share. Before this latest report, the consensus had been expecting revenues of US$47.4m and US$0.28 per share in losses. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the massive increase in earnings per share expectations following these results.
These new estimates led to the consensus price target rising 12% to US$11.00, with lower forecast losses suggesting things could be looking up for Aspen Group. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Aspen Group analyst has a price target of US$12.00 per share, while the most pessimistic values it at US$10.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
In addition, we can look to Aspen Group's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's pretty clear that analysts expect Aspen Group's revenue growth will slow down substantially, with revenues next year expected to grow 17%, compared to a historical growth rate of 42% over the past five years. Compare this to the other companies in this market with analyst coverage, which are forecast to grow their revenue at 20% per year. So it's pretty clear that, while Aspen Group's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to note from these estimates is that the consensus increased its forecast losses next year, suggesting all may not be well at Aspen Group. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Aspen Group going out to 2024, and you can see them free on our platform here.
You can also view our analysis of Aspen Group's balance sheet, and whether we think Aspen Group is carrying too much debt, for free on our platform here.
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