Appian Corporation (NASDAQ:APPN) just released its latest quarterly results and things are looking bullish. Revenues and losses per share were both better than expected, with revenues of US$77m leading estimates by 9.1%. Statutory losses were smaller than the analystsexpected, coming in at US$0.05 per share. Following the result, the 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. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the eight analysts covering Appian are now predicting revenues of US$333.1m in 2021. If met, this would reflect a meaningful 14% improvement in sales compared to the last 12 months. Losses are forecast to balloon 26% to US$0.68 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$325.8m and losses of US$0.68 per share in 2021.
The consensus price target rose 13% to US$63.00, with the analysts encouraged by the improved revenue outlook even though the company remains lossmaking. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. The most optimistic Appian analyst has a price target of US$94.00 per share, while the most pessimistic values it at US$41.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. It’s pretty clear that there is an expectation that Appian’s revenue growth will slow down substantially, with revenues next year expected to grow 14%, compared to a historical growth rate of 20% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 13% next year. So it’s pretty clear that, while Appian’s revenue growth is expected to slow, it’s expected to grow roughly in line with the industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have forecasts for Appian going out to 2024, and you can see them free on our platform here.
We don’t want to rain on the parade too much, but we did also find 5 warning signs for Appian (1 can’t be ignored!) that you need to be mindful of.
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.