Investors in Weibo Corporation (NASDAQ:WB) had a good week, as its shares rose 5.5% to close at US$36.43 following the release of its quarterly results. It looks like a credible result overall - although revenues of US$387m were what the analysts expected, Weibo surprised by delivering a (statutory) profit of US$0.86 per share, an impressive 119% above what was forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, Weibo's 21 analysts currently expect revenues in 2020 to be US$1.64b, approximately in line with the last 12 months. Statutory earnings per share are forecast to shrink 6.1% to US$2.04 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.67b and earnings per share (EPS) of US$1.84 in 2020. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the substantial gain in earnings per share expectations following these results.
There's been no major changes to the consensus price target of US$39.89, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. Currently, the most bullish analyst values Weibo at US$50.00 per share, while the most bearish prices it at US$25.50. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with the forecast 0.2% revenue decline a notable change from historical growth of 30% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 16% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Weibo is expected to lag 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 Weibo's earnings potential 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. The consensus price target held steady at US$39.89, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Weibo going out to 2024, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Weibo .
This article by Simply Wall St is general in nature. 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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