PlaySide Studios Limited (ASX:PLY) Just Reported And Analysts Have Been Lifting Their Price Targets

PlaySide Studios Limited (ASX:PLY) shareholders are probably feeling a little disappointed, since its shares fell 8.2% to AU$0.45 in the week after its latest annual results. Revenues were in line with expectations, at AU$38m, while statutory losses ballooned to AU$0.017 per share. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for PlaySide Studios

Following the latest results, PlaySide Studios' three analysts are now forecasting revenues of AU$53.3m in 2024. This would be a substantial 39% improvement in revenue compared to the last 12 months. Per-share statutory losses are expected to explode, reaching AU$0.00043 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$53.0m and earnings per share (EPS) of AU$0.0024 in 2024. So despite reconfirming their revenue estimates, the analysts are now forecasting a loss instead of a profit, which looks like a definite drop in sentiment following the latest results.

Although the analysts are now forecasting higher losses, the average price target rose 11% to 0.68333, which could indicate that these losses are expected to be "one-off", or are not anticipated to have a longer-term impact on the business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values PlaySide Studios at AU$0.80 per share, while the most bearish prices it at AU$0.70. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that PlaySide Studios' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 39% growth on an annualised basis. This is compared to a historical growth rate of 59% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 8.6% per year. So it's pretty clear that, while PlaySide Studios' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest low-light for us was that the forecasts for PlaySide Studios dropped from profits to a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for PlaySide Studios going out to 2026, and you can see them free on our platform here..

We also provide an overview of the PlaySide Studios Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.