Shareholders of Q2 Holdings, Inc. (NYSE:QTWO) will be pleased this week, given that the stock price is up 13% to US$103 following its latest third-quarter results. The statutory results were not great - while revenues of US$104m were in line with expectations,Q2 Holdings lost US$0.50 a share in the process. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from Q2 Holdings' 17 analysts is for revenues of US$488.0m in 2021, which would reflect a major 28% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 28% to US$1.64. Before this earnings announcement, the analysts had been modelling revenues of US$485.9m and losses of US$1.71 per share in 2021. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for next year.
There's been no major changes to the consensus price target of US$116, suggesting that reduced loss estimates are not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Q2 Holdings at US$125 per share, while the most bearish prices it at US$95.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Q2 Holdings' past performance and to peers in the same industry. Next year brings more of the same, according to the analysts, with revenue forecast to grow 28%, in line with its 25% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 13% per year. So although Q2 Holdings is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
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. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Q2 Holdings analysts - going out to 2024, and you can see them free on our platform here.
Even so, be aware that Q2 Holdings is showing 2 warning signs in our investment analysis , you should know about...
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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