Yahoo Finance US$79.50 - That's What Analysts Think Amdocs Limited Is Worth After These Results
Investors in Amdocs Limited (NASDAQ:DOX) had a good week, as its shares rose 3.8% to close at US$74.70 following the release of its first-quarter results. Revenues of US$1.0b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$0.85, missing estimates by 4.0%. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Amdocs
Taking into account the latest results, the most recent consensus for Amdocs from five analysts is for revenues of US$4.24b in 2020, which is a satisfactory 3.1% increase on its sales over the past 12 months. Statutory per share are forecast to be US$3.60, approximately in line with the last 12 months. Before this earnings report, analysts had been forecasting revenues of US$4.22b and earnings per share (EPS) of US$3.68 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.
Despite cutting their earnings forecasts, analysts have lifted their price target 5.1% to US$79.50, suggesting that these impacts are not expected to weigh on the stock's value in the long term. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Amdocs analyst has a price target of US$85.00 per share, while the most pessimistic values it at US$74.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
In addition, we can look to Amdocs's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. Next year brings more of the same, according to analysts, with revenue forecast to grow 3.1%, in line with its 2.9% 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 11% per year. So it's pretty clear that Amdocs is expected to grow slower than similar companies in the same market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Amdocs. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Amdocs's revenues are expected to perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Amdocs going out to 2021, and you can see them free on our platform here.
We also provide an overview of the Amdocs Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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