As you might know, Smartsheet Inc. (NYSE:SMAR) just kicked off its latest first-quarter results with some very strong numbers. Revenues and losses per share were both better than expected, with revenues of US$85m leading estimates by 5.0%. Statutory losses were smaller than the analystsexpected, coming in at US$0.23 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the consensus forecast from Smartsheet's 15 analysts is for revenues of US$365.0m in 2021, which would reflect a huge 22% improvement in sales compared to the last 12 months. Losses are expected to increase substantially, hitting US$1.05 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$371.5m and losses of US$1.05 per share in 2021.
The consensus price target was unchanged at US$51.60, suggesting that the business - losses and all - is executing in line with estimates. 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 Smartsheet analyst has a price target of US$67.00 per share, while the most pessimistic values it at US$45.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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 Smartsheet's revenue growth will slow down substantially, with revenues next year expected to grow 22%, compared to a historical growth rate of 52% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% next year. So it's pretty clear that, while Smartsheet's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$51.60, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Smartsheet. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Smartsheet analysts - going out to 2025, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 4 warning signs for Smartsheet (1 is concerning) you should be aware of.
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