FINEOS Corporation Holdings plc (ASX:FCL) Just Reported, And Analysts Assigned A AU$4.53 Price Target

It's been a mediocre week for FINEOS Corporation Holdings plc (ASX:FCL) shareholders, with the stock dropping 15% to AU$3.30 in the week since its latest half-year results. The results were positive, with revenue coming in at €65m, beating analyst expectations by 6.0%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for FINEOS Corporation Holdings

Following the latest results, FINEOS Corporation Holdings' six analysts are now forecasting revenues of €125.8m in 2022. This would be a credible 3.9% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 25% to €0.028. Yet prior to the latest earnings, the analysts had been forecasting revenues of €128.0m and losses of €0.021 per share in 2022. While this year's revenue estimates held steady, there was also a very substantial increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 6.5% to AU$4.53, with the analysts signalling that growing losses would be a definite concern. 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. There are some variant perceptions on FINEOS Corporation Holdings, with the most bullish analyst valuing it at AU$5.10 and the most bearish at AU$3.98 per share. This is a very narrow spread of estimates, implying either that FINEOS Corporation Holdings is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. We would highlight that FINEOS Corporation Holdings' revenue growth is expected to slow, with the forecast 7.9% annualised growth rate until the end of 2022 being well below the historical 26% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 18% per year. Factoring in the forecast slowdown in growth, it seems obvious that FINEOS Corporation Holdings is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse 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 FINEOS Corporation Holdings' 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. We have estimates - from multiple FINEOS Corporation Holdings analysts - going out to 2024, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for FINEOS Corporation Holdings that you should be aware of.

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.