Dropsuite Limited Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Investors in Dropsuite Limited (ASX:DSE) had a good week, as its shares rose 9.4% to close at AU$0.29 following the release of its full-year results. It was not a great result overall. Although revenues beat expectations, hitting AU$31m, statutory earnings missed analyst forecasts by 14%, coming in at just AU$0.0022 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.

Check out our latest analysis for Dropsuite

Taking into account the latest results, the consensus forecast from Dropsuite's three analysts is for revenues of AU$41.0m in 2024. This reflects a sizeable 31% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 101% to AU$0.0046. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$40.1m and earnings per share (EPS) of AU$0.0041 in 2024. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a decent improvement in earnings per share in particular.

It will come as no surprise to learn that the analysts have increased their price target for Dropsuite 5.5% to AU$0.38on the back of these upgrades. 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. Currently, the most bullish analyst values Dropsuite at AU$0.41 per share, while the most bearish prices it at AU$0.34. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Dropsuite's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 31% growth on an annualised basis. This is compared to a historical growth rate of 41% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 16% annually. So it's pretty clear that, while Dropsuite's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Dropsuite's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Dropsuite going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Dropsuite .

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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.