Earnings Update: Here's Why Analysts Just Lifted Their Technology One Limited (ASX:TNE) Price Target To AU$27.45

Shareholders of Technology One Limited (ASX:TNE) will be pleased this week, given that the stock price is up 13% to AU$30.49 following its latest full-year results. It was a credible result overall, with revenues of AU$507m and statutory earnings per share of AU$0.36 both in line with analyst estimates, showing that Technology One is executing in line with expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 Technology One

After the latest results, the 17 analysts covering Technology One are now predicting revenues of AU$581.2m in 2025. If met, this would reflect a solid 15% improvement in revenue compared to the last 12 months. Per-share earnings are expected to climb 19% to AU$0.43. Before this earnings report, the analysts had been forecasting revenues of AU$564.4m and earnings per share (EPS) of AU$0.42 in 2025. There doesn't appear to have been a major change in sentiment following the results, other than the small lift in revenue estimates.

The consensus price target increased 37% to AU$27.45, with an improved revenue forecast carrying the promise of a more valuable business, in time. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Technology One at AU$35.00 per share, while the most bearish prices it at AU$15.36. 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 clear from the latest estimates that Technology One's rate of growth is expected to accelerate meaningfully, with the forecast 15% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 12% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Technology One is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. 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.

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 Technology One analysts - going out to 2027, and you can see them free on our platform here.

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

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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.