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It's been a mediocre week for WalkMe Ltd. (NASDAQ:WKME) shareholders, with the stock dropping 15% to US$13.79 in the week since its latest annual results. It was a pretty bad result overall; while revenues were in line with expectations at US$193m, statutory losses exploded to US$1.85 per share. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, WalkMe's seven analysts are now forecasting revenues of US$252.1m in 2022. This would be a huge 30% improvement in sales compared to the last 12 months. Losses are expected to hold steady at around US$1.14. Before this latest report, the consensus had been expecting revenues of US$245.6m and US$0.74 per share in losses. While this year's revenue estimates increased, there was also a massive increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
It will come as no surprise that expanding losses caused the consensus price target to fall 15% to US$27.38with the analysts implicitly ranking ongoing losses as a greater concern than growing revenues. 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 WalkMe analyst has a price target of US$40.00 per share, while the most pessimistic values it at US$19.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 30% growth on an annualised basis. That is in line with its 30% annual growth over the past year. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 14% annually. So although WalkMe is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for WalkMe going out to 2024, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 2 warning signs for WalkMe you should know about.
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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.