HighCom Limited (ASX:HCL) Just Reported, And Analysts Assigned A AU$0.34 Price Target

HighCom Limited (ASX:HCL) investors will be delighted, with the company turning in some strong numbers with its latest results. Revenues beat expectations coming in atAU$15m, ahead of estimates by 6.8%. Statutory losses were somewhat smaller thanthe analysts expected, coming in at AU$0.13 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for HighCom

Following the recent earnings report, the consensus from twin analysts covering HighCom is for revenues of AU$48.9m in 2024. This implies a considerable 13% decline in revenue compared to the last 12 months. Per-share losses are predicted to creep up to AU$0.14. Before this earnings announcement, the analysts had been modelling revenues of AU$47.7m and losses of AU$0.10 per share in 2024. So it's pretty clear the analysts have mixed opinions on HighCom even after this update; although they upped their revenue numbers, it came at the cost of a very substantial increase in per-share losses.

It will come as no surprise that expanding losses caused the consensus price target to fall 53% to AU$0.34with the analysts implicitly ranking ongoing losses as a greater concern than growing revenues.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 24% by the end of 2024. This indicates a significant reduction from annual growth of 21% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - HighCom is expected to lag the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at HighCom. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of HighCom's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for HighCom that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.