$8.55: This is what analysts think UserTesting, Inc. (NYSE: USER) is worth after its latest results
There was a massive sale in UserTesting, Inc. (NYSE:USER) shares the week since its Q2 report was released, with the stock dropping 23% to US$4.87. Revenue of US$48 million was in line with expectations, although statutory losses per share were US$0.13, 22% lower than forecast by broker models. It’s an important time for investors, as they can follow a company’s performance in its report, watch what experts are predicting for next year, and see if there’s been a change in company expectations. ‘company. We’ve rounded up the most recent statutory forecasts to see if analysts have changed their earnings models as a result of these results.
Based on the latest results, UserTesting’s eleven analysts’ consensus forecast predicts revenue of US$192.2 million in 2022, which would reflect a significant 10% improvement in sales over the past 12 months. Losses are expected to climb 35% to US$0.57 per share. Prior to this earnings announcement, analysts had modeled 2022 revenue of US$197.8 million and loss of US$0.64 per share. looks a little different from the past, with a reduction in loss. forecasts per share in particular.
The consensus price target fell 29% to settle at US$8.55 as lower earnings estimates clearly eroded sentiment, despite the expected narrowing of losses. Fixing on a single price target, however, can be unwise, as the consensus target is actually the average of the analysts’ price targets. As a result, some investors like to look at the range of estimates to see if there are any differing opinions on the company’s valuation. The most optimistic UserTesting analyst has a price target of $9.00 per share, while the most pessimistic puts it at $8.00. This is a very narrow range of estimates, implying that either UserTesting is an easy company to assess, or – more likely – analysts rely heavily on certain key assumptions.
One way to get more context on these forecasts is to examine how they compare both to past performance and to the performance of other companies in the same industry. It’s pretty clear that UserTesting’s revenue growth is expected to slow significantly, with revenue through the end of 2022 expected to show 21% growth on an annualized basis. This is compared to an historic growth rate of 43% over the past year. Juxtapose that to other companies in the industry with analyst coverage, which are expected to grow revenue (in total) by 13% annually. Even after the expected slowdown in growth, it seems clear that UserTesting is also expected to grow faster than the industry as a whole.
The most important thing to remember is that analysts have reconfirmed their loss per share estimates for next year. Unfortunately, they have also lowered their revenue estimates, but the latest forecasts still imply that the company will grow faster than the industry as a whole. That said, profits are more important to the long-term value of the business. Additionally, analysts have also cut their price targets, suggesting the latest news has led to greater pessimism about the company’s intrinsic value.
With that in mind, we wouldn’t be too quick to come to a conclusion on UserTesting. Long-term earnings power is much more important than next year’s earnings. At Simply Wall St, we have a full range of analyst estimates for UserTesting through 2024, and you can view them for free on our platform here.
However, you should always think about the risks. Concrete example, we spotted 3 warning signs for UserTesting you should know, and one of them makes us a little uneasy.
Feedback on this article? Concerned about content?Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.