Audinate Group Limited Just Reported A Surprise Profit, And Analysts Lifted Their Estimates

The investors in Audinate Group Limited's (ASX:AD8) will be rubbing their hands together with glee today, after the share price leapt 31% to AU$12.99 in the week following its full-year results. Audinate Group beat expectations by 8.0% with revenues of AU$70m. It also surprised on the earnings front, with an unexpected statutory profit of AU$0.14 per share a nice improvement on the losses that the analysts forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Audinate Group

Following the latest results, Audinate Group's six analysts are now forecasting revenues of AU$89.2m in 2024. This would be a sizeable 28% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dive 65% to AU$0.048 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$79.6m and earnings per share (EPS) of AU$0.028 in 2024. So we can see there's been a pretty clear increase in sentiment following the latest results, with both revenues and earnings per share receiving a decent lift in the latest estimates.

It will come as no surprise to learn that the analysts have increased their price target for Audinate Group 20% to AU$12.34on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Audinate Group, with the most bullish analyst valuing it at AU$15.00 and the most bearish at AU$5.28 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. The analysts are definitely expecting Audinate Group's growth to accelerate, with the forecast 28% annualised growth to the end of 2024 ranking favourably alongside historical growth of 22% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 17% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Audinate Group is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Audinate Group'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.

With that in mind, we wouldn't be too quick to come to a conclusion on Audinate Group. Long-term earnings power is much more important than next year's profits. We have forecasts for Audinate Group going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Audinate Group that we have uncovered.

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.