Shareholders in Inseego Corp. (NASDAQ:INSG) had a terrible week, as shares crashed 30% to US$4.09 in the week since its latest full-year results. Sales hit US$219m in line with forecasts, although the company reported a statutory loss per share of US$0.52 that was somewhat smaller than analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Inseego
After the latest results, the six analysts covering Inseego are now predicting revenues of US$261.9m in 2020. If met, this would reflect a solid 19% improvement in sales compared to the last 12 months. Statutory losses are forecast to balloon 46% to US$0.28 per share. Before this latest report, the consensus had been expecting revenues of US$268.0m and US$0.19 per share in losses. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share forecasts.
The average analyst price target fell 6.4% to US$7.88, implicitly signalling that lower earnings per share are a leading indicator for Inseego'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 Inseego at US$9.25 per share, while the most bearish prices it at US$6.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Inseego shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Inseego's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow at 19%, well above its historical decline of 0.2% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue grow 3.5% per year. So it looks like Inseego is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to take away is that analysts reduced their loss per share estimates for next year, perhaps highlighting increased optimism around Inseego's prospects. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Inseego analysts - going out to 2021, and you can see them free on our platform here.
You can also see whether Inseego is carrying too much debt, and whether its balance sheet is healthy, for free on our platform 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
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March 13, 2020 at 08:10PM
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Inseego Corp. Just Reported Earnings, And Analysts Cut Their Target Price - Yahoo Finance
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